Stop Guessing, Build a Smarter Retirement Plan

In this episode of Empty Nest Full Pockets, financial planner Matt Meline breaks down a powerful concept that can transform how you experience retirement: the “Permission to Spend” framework.

After years of disciplined saving, many empty nesters still struggle to enjoy their money. Instead of feeling freedom, they feel hesitation — constantly questioning whether they’re spending too much, too soon.

Matt explains how this mindset often comes from a lack of structure, not a lack of savings.

Using a simple yet impactful example, he compares two retirees with identical portfolios—one without a strategy and one with a tax-smart withdrawal plan. The difference? Hundreds of thousands of dollars in lifetime taxes… and a dramatically different retirement experience.

This episode walks through how coordinating income sources, managing tax brackets, and timing withdrawals can help reduce tax burdens and create clarity around what you can safely spend.

The result is a plan with guardrails — giving you the confidence to enjoy your retirement without second-guessing every decision.

If you’ve been playing it safe but wondering if you could be living more fully, this episode will help you rethink what’s possible.

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Episode Highlights

•  The “Permission to Spend” mindset 
•  Why retirees often still feel financial scarcity 
•  Example: two retirees with identical portfolios but different outcomes 
•  The cost of not having a tax strategy 
•  How strategic withdrawals can reduce lifetime taxes 
•  What the Permission to Spend framework solves 
•  Building spending guardrails (high vs. low ranges) 
•  Coordinating income sources, taxes, and timing 
•  Using Roth accounts to manage tax brackets 
•  Why asset location matters for tax efficiency 
•  Tax diversification for flexibility in retirement 
•  “Bracket-busting” strategies explained 
•  Roth conversion opportunities (ages 60–73) 
•  Capital gains harvesting strategies 
•  Charitable giving and tax efficiency 
•  Reviewing your tax return for planning opportunities 
•  Creating a retirement tax plan 
•  Adjusting spending during market volatility 
•  Final thoughts: building confidence through planning

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Transcript

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We talk a lot about permission to spend, and it's important to me because what I see is people living with a lot of scarcity in their retirement plan where they could be spending more. And by having a permission to spend framework, by developing guardrails on the high side of what we can spend and the low side, and know that there is a plan there, can really free up that freedom and flexibility. Welcome to the Empty Nest Full Pockets Podcast. This is a show for parents who have launched their kids and are ready to reclaim their time, their purpose, and their financial power. Hey, I'm Matt Maline. I'm a financial planner, I'm an empty nester, and a fellow traveler on this new adventure. After years of putting others first, the school drop-offs, the college decisions, soccer practice, late-night talks. This season is finally yours. But let's be real, it's not just about freedom and wine at 5 o'clock. It's also about navigating college costs, caring for our aging parents, real estate decisions, shifting our careers, and helping our adult kids without sacrificing our own dreams. So each week we're going to dive into some real life questions that come after the kids leave the nest. So through stories, expert insights, and a little bit of humor, we're going to explore how to turn this life transition into your next great chapter. Let's go through a quick example for you. All right, so we've got two retirees that have the same portfolio. I'm using the names Tyrion and Joe Wrath. So if you can't tell, I'm on season five of Game of Thrones, and we're knee deep into the Tyrion, who was the son of one of the kings, and then Joe Wrath, who loves Daenerys, who's also a queen, and it's a Game of Thrones. So they're fighting over who's going to be on the throne, as you can imagine. All right. So Tyrion and Joe Wrath both have a $2 million portfolio. They want to spend about $80,000 a year. And Tyrion does not have any strategy. Bad Tyrion. So he's got a $2 million portfolio. He just withdraws from his IRA when he's needed, when he's going to go to the pub. We're talking about this stuff on St. Patrick's Day, so happy belated St. Patrick's Day. But on a day like this, Tyrion's probably at the pub having some green beer enjoying himself. So he pulls money from his IRA when he needs it. He started his Social Security when he was 67. And now he's expecting some large required minimum distributions when he's 73. So the result for Tyrion is that he's going to be in a higher tax bracket at 73. He's going to have higher Medicare surcharge premiums. And he's also just going to have overall higher lifetime taxes if he lives quite a while. Now, in Game of Thrones, people don't necessarily live very long. You can be a favorite character in Game of Thrones and they will behead you without equivocation. So if you're an actor in that movie, you want to make sure you've got a backup plan because they may not be keeping you for very long. But anyway, let's say Tyrion lives a normal life into his 90s, and we expect his lifetime taxes could be anywhere around potentially $650,000 for his retirement plan. Joe Rath has got a tax strategy, however. Got the same portfolio of $2 million, and what he does is withdraw some of his brokerage monies first that he's got in those taxable accounts. And then from the age of 60 to 72, when he's out there pillaging, he does some Roth conversions. And he starts with small amounts and then steadily increases those as his income continues to go down from his work that he does for Daenerys. What he's doing here is managing his tax brackets intentionally. If he gets to a year where he's going to be start kicking up into another bracket, he pulls some money from Roth, or he uses his taxable monies a little bit higher. But he's being intentional about how he's doing this. And what's going to result for Joe Rath is that he's going to have lower RMDs, he's going to be in a lower bracket, and we estimate he's going to pay about half as much as Tyrion in lifetime taxes. What that moves us to is the permission to spend framework that I want to talk about. And I think this is a smarter retirement strategy that's going to coordinate your income sources, your taxes, and your timing. We talk a lot about permission to spend, and it's important to me because what I see is people living with a lot of scarcity in their retirement plan where they could be spending more. And by having a permission to spend framework, by developing guardrails on the high side of what we can spend and the low side, and know that there is a plan there, can really free up that freedom and flexibility. Income taxes are a huge part of the permission to spend framework. We have to know where our income sources are coming from, we have to know what taxes we're going to pay on those sources, and we have to know the right timing of doing that. Like I said, let's talk about Roth real quick. If we have $100,000 in Roth and a million in IRA, what we can look at is, and let's say we have a couple hundred grand in the taxable account. As we're going through our first few years in retirement, if we start bumping up to that bracket of the next from 15 to 24 or whatever the number is for you, by using a little bit of Roth that year, we could be keeping ourselves in a lower bracket. And studying those income sources, doing some good planning throughout the year, could end up saving you quite a bit. And then as the plan progresses through those years, you can keep readjusting as needed. But that permission to spend framework tells us, all right, we can spend $10,000 a month safely, for instance. Where's that source? Where are those sources going to come from? And making sure that we have the right assets in the right classes is also important. So I talked a lot about mutual funds and taxation in there. If you're going to use mutual funds, use them in your IRA. Use them in your Roth. Because those taxes that come out are not going to, you're not going to pay taxes on them. Either you'll have a tax deferred in the IRA or you'll have uh tax-free inside of your Roth. If you're going to be looking to do individual stocks, your brokerage accounts are a great way to do that because you can control when you sell those. You can wait for a year and get a long-term capital gain treatment. If you're getting a dividend from that stock, let's say you own Wells Fargo or any name that's paying a dividend Exxon that's paying a dividend right now, you can look at dividend reinvest, and it's going to be a qualified dividend, which is taxed at a more favorable rate than an ordinary dividend. So all of these things, where those assets are located, also comes into play in this smarter retirement framework. So you've got your assets that are going to be benefited tax-wise in the right buckets along the way. The other thing that we want to look at is tax diversification. And the reason that this matters is that we're looking at future tax flexibility, better control of our income levels, and an overall lower lifetime tax bill. So, like I talked about, this is our accounts working together, our brokerage accounts, our Roth accounts, our tax deferred, all the things that we've already mentioned. All right, March Madness is kicking off right now. We just saw the brackets come out this week, and all the games start this week. Good to see all three state schools in Iowa made it. Woo-hoo. How about those Panthers? So we want to talk about bracket busting. And so what we want to do here is we want to fill our lower tax brackets intentionally. So the way that we do that is through Roth Conversions. So we're saying we know we're in a lower bracket. Let's convert while we can take advantage of that lower tax rate. Our capital gain harvesting. Maybe this is a good year where you've got a long-term position that you've held forever. So, do I want to harvest some of that capital gain? Take some profits. I've been doing this for our clients, for example, in our gold positions. Gold is a buy-low sell high asset in my mind. It doesn't have a dividend, it doesn't earn any money. But when it goes up, you have to take profits along the way to benefit from the lift of that because you don't know how long it's going to last. The other thing that bracket busting has really changed is the new higher standard tax deduction that's available. So those keep going up. They changed with the recent tax bills. And a lot of our clients in the past, what we'd look at is their mortgage interest if they had some, and then their state and local taxes, which have been capped up to this point, where we now have a higher limit on those in some cases, and then their charitable strategies. So we would always kind of take a look at if you're going to be doing money for charitable intent anyway, what's the best way we can do that? Maybe we introduce a donor advice fund, which allows us to bunch our contributions. Or we had that same position that we wanted to harvest our capital gains in. Maybe we give some of that stock away. We avoid the capital gain, and the charity gets the stock and gets to sell it, do whatever they want with it for their proceeds. Everybody wins in that situation. So with this higher standard deduction, we've had to be more careful because you really have to give away a lot if you don't have any of the other deductions like your state and local taxes above a certain number or a big mortgage interest or big medical expenses, where the higher standard deduction is going to capture that. So maybe the charitable strategy isn't going to give us above. So we just want to be more careful in when we're doing that and much more intentional. Because if we have a big gift that we want to give, or we know future gifts that we want to give, but we have the securities now, we might want to bunch those contributions in a given tax year. So that can be bracket busting. That can be a way we can take advantage of a higher standard deduction by still using our charitable intent in a way that we are more thoughtful about in a given year. The other thing that's come to fruition with bracket busting is qualified charitable distributions. When you do get into your 70s, you will have the opportunity with those required distributions to give some of that money away. By doing so, you're reducing your taxes a little bit. And we are seeing tons of our clients take advantage of this. So we won't get into the depth of all of those, but they can be a great tool where you can use your charitable distributions to bring that bracket down, bracket busting in March. The other thing that you want to do is sequence your income wisely and not be random about your withdrawal. So when we have all of our taxable assets and our tax-deferred accounts and our Roth, we want to be strategic in how we're adjusting that. I'd like to talk about your early Roth retirement window, I call this. So I want you to think about years age 60 to 73, depending on your work situation. Some people accelerate their work into their 60s and end up making more money. So this wouldn't apply in that case. Many of us, however, whether it's health or just stress or doggone, I'm just done with it, decide to work less. I met a guy playing tennis a few weeks ago, and he was telling me how he'd gone from a corporate job to basically where he could contract his work out and was completely doing it at his discretion. So income was lower, but a lot more freedom of lifestyle. So we talk a lot about that in our permission to spend frameworks and our second half of life journeys as to whether you might want to find a way that you can do that. But if that works for you, so from age 60 to 73, retire work may be downshifting and retirement is pending, and we're before our required minimum distributions. So this is often the our lowest tax years of retirement because we haven't seen a lot of social security income quite yet, perhaps, and we're also not required to take any of that money out quite yet. So Roth conversion is a huge opportunity here where you can begin to convert dollars into that Roth and have a tax-free bucket that could be really meaningful when you get into retirement. The other thing is capital gain harvesting. Like I mentioned, a lot of clients will have stock that they've owned for years, companies that they purchased in their shoot 20, 30s, or 40s and have held for years and let the dividends reinvest. Or they got involved with technology stocks after the Amazon craze began after the 2002 change. Whatever the case may be for you, if you've got large capital gains, I see this a lot now in like SP index funds and in Nasdaq funds, those kind of things where we've held them for years, they've reinvested, and now we've got more gains than we do in principal value. So these lower tax years are a great chance to harvest that. As part of our webinar today, I've put in the download in the files two what I consider very powerful checklists. And what they are, the ability, a checklist where you can go through and review your tax return to look for opportunities. And the difference in the two is one is for people that are still working and the other is for those that are retired. Because you have very different tax situations. Whether no matter where you're at in the journey, I'd pull both of them down because you can see some great tips. And so what these tools allow us to do with our clients is basically we can take a look at tax returns and then answer questions like did we take the standard deduction or did we itemize? Did we have any unexpected taxes or refunds? Are dividends and interest coming from the right accounts? Are our capital gains or losses being managed properly? And these are among the items that clients review when evaluating a return. And as I mentioned, they're a little bit different depending on your tax situation. So if you're retired, for instance, we obviously obviously obviously so if you're retired, for instance, we can review important tax items like required minimum distributions. Did we take any or should we be using any qualified charitable distributions? Did we do any Roth conversions? Taking a look at our IRA basis, any rollover reporting. All these kind of things appear in the retirement planning section of this checklist. So make sure you check that out. The one I have pulled up here is as a retiree. And then we've also got one, as I mentioned, if you're still working. And those issues for those that are still working can be things like equity compensation, HSA, contributions that we make to our retirement plans, any capital gains exposure. And so these items all appear on the working tax return checklist. I hope to take advantage of those two checklists because I think you'll see a lot of valuable information in there. One of the things that we also offer at Prairie Fire is a retirement tax review. And what this can help you do is identify tax risks, optimize your withdrawals, create those spending guardrails that we talk about and really give you a sense of continuity when it comes to your income tax plan for retirement. What we would do is take a look at your last two tax returns, where your investment income sources are coming from, how your retirement accounts are situated, the assets that are inside those retirement accounts, see if they're in the right place. Social Security timing, a big one. We're hearing a lot of questions on this lately. When should I take it? In many cases, it's very individual, very distinct to you as a client when you should be taking that social security benefit. So if you're interested in a retirement tax plan review, please email us at infopwplanning.com and just say I'm interested, and we will get back to you, set up a time. We can start securely downloading documents and get this put together for you. It's not a heavy lift. We just need a few things and off we'll go and get you some really important information. We'll also go through these two checklists with you based on your stage in life to see if there's anything that you might be missing along the way. All right, back with everybody. Thank you so much for uh listening in today and talking about all the challenges and joys of retirement planning as it pertains to taxes. All right, I got a couple questions here. Uh, what if the market drops early in my retirement? Should I stop spending? I've actually been through this when we went through the global financial crisis in 2008 and 2009 when people had to modify their plans. Uh, most in that situation kept working a little bit longer than they expected to when we saw these precipitous declines in the market. The reason we set up the guardrail plan early when we work with folks is to let you know on the high side and the low side when we we would need to adjust spending. And those calculations are built on thousands and thousands of market simulations, but they're also realistic in saying this is how much you should consider pulling that spending back a little bit if we do have uh a crazy market environment. Hopefully, we see one or two of these in our lifetimes. They used to say that about flooding in Iowa. We'd only see one in a hundred years, but it seemed like every 10 years we were we were flooding out West Des Moines. All that's to say, there will be situations potentially where you'd have to decrease your spending. But if you've done some good planning up front, you'll know when that's coming and how much those adjustments are going to need to make. And the the opposite is also true, though. If we've had years like the last two to three years where the markets have been really, really good, we can also look to increase our spending and live bigger. And so the it goes both ways, is my point. And if that the market does not behave well, or if for whatever reason a particular investment doesn't work out the way that you thought you could, we you can always adjust that spending. And in some cases, you will and might need to, but in a lot of cases, if you can live within those guardrails on the high side and low side, you can sustain some ups and downs. Normal market corrections, 10-15%, we see all the time. They're never any fun, and they always come fast, like April of last year, or COVID, or whatever. I can give you a hundred examples, and we've seen the market recover from those. Those aren't what I'm talking about, it's the big changes that that require some uh modifications to that. And so to date, we haven't had many of those for over almost a decade, and I hope that will be the case for uh for decades to come. We'll see. The other question I got, and I wanted to caution on us. We talked a lot today about Roth conversions. When you do those Roth conversions, you pull the money out of your IRA, convert it to a Roth, you're doing a withdrawal from that IRA, which is going to create an ordinary income tax bill. That's why I say it lower brackets, you want to look at that. The other thing is that you would hopefully have some money set aside outside of the IRA to pay that tax bill. That basically makes that whole process more effective. Because if you're pulling and having to have taxes withheld or paid out of what you're pulling out, you're you're deducting it a larger amount that then has to be made back up before that Roth conversion becomes profitable for you. Thank you for joining me on this episode of Empty Nest Full Pockets. If you're navigating some big life transitions and big financial decisions, this is the place to be. Don't forget to follow the show, leave a review, and share it with a friend who's entering this phase of life, this new chapter, too. Until next time, keep your heart full, your mind clear, and your pockets even fuller. Giddy up!