Nearing retirement? You’re in the Retirement Red Zone... and Every Decision Counts.

Victoria Larson | Aug 27, 2026

Transcript:

Erin Kennedy 00:05
Victoria, so good to see you. This video is for anyone who is nearing retirement plan. Nearing
retirement, we have a four-step action plan for success. If you are close to retirement, you're in
what's known as the retirement red zone. Every financial decision you make is crucial, which is
why we are laying out a four-step plan to help you maximize tax advantages, manage future
income, and avoid costly surprises. Step number one: max out your tax advantaged accounts,
including those catch-up contributions.

Victoria Larson 00:33
Absolutely. Okay. If you are five to 10 years out from retirement, you are in your highest earning
years. This is the time where you really want to sock as much money away as possible for
retirement, and here you will see that if you contribute to your 401k, 403 b4, 50 sevens, you can
put away $24,500 each year, and then there's a catch-up. So if you're between 50 and before
hitting 60, you can put away an additional $8,000 a year. And then there's this special catch-up
period: 6061, 6263, That instead of 8000, you can add another. You can put away $11,250.
That means each individual 35,007 50 can be deferred to later for retirement for a married
couple. Just multiply that by two.

Erin Kennedy 01:34
Yeah, I mean that can really add up fast. On that note, step number two: open and max out an
IRA. And if we've been good savers in that tax deferred account, you suggest maybe making all
of our contributions Roth. Why is that?

Victoria Larson 01:46
I absolutely do, and here's why: for most people, if you they have a heavy amount of money in
the tax deferred accounts, right? That lower blue triangle, so they're heavily lopsided there. So I
would encourage you to put money into the tax-free account because that's just giving you
another lever in retirement. Things that you need to keep in mind is any dollar in that tax
deferred, it's already determined that you're going to have to pay taxes on every one of those
dollars, and depending how much you're having to take out in when you're in required minimum
distributions, you could find yourself not only paying higher taxes, but higher IRMA costs. So
adding and building that tax-free bucket is just giving you another lever to leverage in
retirement.

Erin Kennedy 02:39
Right. On that note, as we talk through tax diversification, you suggest considering health
savings accounts. These, I know, are one of your favorite because they are uniquely triple tax
advantaged.

Victoria Larson 02:49

They are triple tax advantaged. They are the most tax efficient dollars. So when you put money
in to those accounts, you get a deduction. As your money grows, it grows tax-free. If you take
money out of these accounts for a qualified medical expense, you pay no taxes. It is the only
account that is triple tax-free for you. So, a couple things I would encourage you to do is one:
think of it not as a spending account but as a retirement account, right? Make sure that HSA is
growing, and know that you can use those dollars to pay Medicare Part B and D premiums or
Advantage plans, or some of them could be even used for qualified long term care insurance.
You really want to optimize those dollars.

Erin Kennedy 03:39
Absolutely. Step number four. You touched on this a second ago. These are all interrelated,
aren't they? Understand your RMDs, your required minimum distributions. A lot of people again
assume they're going to be in a lower tax bracket when they retire, but these RMDs throw a lot
of people off.

Victoria Larson 03:53
Yeah, and as I already shared, that majority people have their money in those tax deferred
accounts, and the compounding between, you know, average retirement at 65 to the new
retirement age for most people is 73 and 75. So that's a lot of years of compounding. And then
when they're forced to take money out, they could be at a significantly higher tax bracket for
those dollars. So what this is saying, and this is kind of an eye opener for folks. If you are born
between 1951 and 59, your your RMD age is 73, and if you are born January 1, 1960, or or
later, then your RMD age is 75. Those are the years where you're going to be forced to take
money out, whether you need it or not.

Erin Kennedy 04:48
And then we have a bonus step for everyone, and that is consult a financial advisor. Why?

Victoria Larson 04:55
Yeah, everything what I just described-how to draw down on these. How to prevent those IRA
and 401k accounts from growing so significantly, so that you are in a higher tax bracket in the
later years, can be managed, and an advisor can really help you to figure out how to
strategically draw down on those accounts to minimize that tax torpedo in the future, or how to
start proactively doing some Roth conversions to protect those assets.

Erin Kennedy 05:28
Yeah, no, good point. I mean, there's so much to coordinate, and moving one piece changes
another one, right?

Victoria Larson 05:33
All integrated.

Erin Kennedy 05:34

Yes. If somebody would like to sit down with you, if they are in that retirement red zone, make
sure all these pieces are aligned. What's the best way to reach you?

Victoria Larson 05:42
They can contact us at info@vitalityinvestments.org.

Erin Kennedy 05:47
Wonderful. Again, Victoria, thank you so much for your time today. I appreciate it.

Victoria Larson 05:51
Thank you.

Nearing retirement? You’re in the Retirement Red Zone... and Every Decision Counts.

Nearing retirement? You’re in the Retirement Red Zone... and Every Decision Counts.

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