5 Financial Planning Tips for Claremont Residents Nearing Retirement
Nearing retirement in Claremont, California? You’ve worked hard to build your savings, but as you approach this next chapter, new questions emerge: When should I claim Social Security? Will my savings keep pace with California’s costs? Am I truly ready?
Living in a vibrant yet high-cost city like Claremont means your retirement plan has to do more than just cover the basics. It needs to protect your lifestyle and give you peace of mind. With the right strategies, you can navigate taxes, housing, and market uncertainty while still enjoying everything this community has to offer.
Here are five financial planning tips to help you enjoy your next chapter without unnecessary stress.
1. Review Your Retirement Income Sources
As retirement nears, you’ll want to understand exactly where your income will come from. Income sources typically include:
Social Security: Deciding when to claim benefits can impact your lifetime income. Waiting to claim, up to age 70, increases your monthly benefit, while claiming early provides smaller payments but over a longer period. Talking with a fiduciary financial advisor can help you determine the opportune age to claim benefits based on your overall financial and health concerns and lifestyle goals.
Pensions & 403(b)/401(k) Plans: Many professionals, such as Claremont Colleges employees and Kaiser Permanente physicians, participate in employer-sponsored retirement plans. Take the time to understand your distribution options and required minimum distribution (RMD) timelines.
Other Investments: Brokerage accounts, real estate, and other personal assets can also provide supplemental income.
Tip: Build a retirement income timeline. Identify which accounts you’ll tap first and how your strategy impacts your taxes and cash flow. A timeline approach can prevent you from drawing too heavily on any one account and from accidentally triggering higher tax brackets.
2. Get Smart About Taxes in Retirement
Even after you stop working, taxes don’t stop. California taxes most retirement income, including 403(b) and IRA withdrawals, at ordinary income rates. While Social Security is exempt from California state tax, it may still be taxable at the federal level.
Strategies to consider:
Withdrawal Sequencing: A general rule of thumb is to spend from taxable accounts first, then tax-deferred accounts, and save Roth accounts for last—allowing your tax-advantaged funds to keep growing.
Roth Conversions: If you expect to be in a higher tax bracket later, converting portions of your 401(k) or IRA to a Roth in lower-income years (before RMDs kick in) can help reduce future taxes.
Capital Gains Management: If you own a taxable portfolio, time the sale of appreciated assets to minimize gains or stay within favorable capital gains brackets.
Tip: Work with a fiduciary financial advisor or tax professional to create a multi-year tax strategy that smooths out your taxable income and minimizes surprises.
3. Revisit Your Housing Decisions
Housing is often a retiree’s biggest expense—and opportunity. In a high-cost market like Claremont, your home may be one of your largest assets.
Options to evaluate:
Stay put: Review property taxes and consider California’s Proposition 19 portability rules if downsizing within the state.
Downsize: Moving to a smaller or more accessible home could free up equity for retirement income while reducing ongoing expenses.
Explore reverse mortgages: For some retirees, this can create cash flow without selling, though it requires careful consideration.
Tip: Decide whether your home will be a retirement nest or a source of retirement funding. A financial plan should account for property values, taxes, and maintenance costs.
4. Adjust Your Portfolio for Retirement
The closer you are to retirement, the more your investment strategy should reflect your need for income and risk tolerance. In practice, that may mean:
Reducing unnecessary risk: Shift from highly volatile investments into a more balanced allocation of equities, bonds, and cash.
Focusing on income: Consider dividend-paying investments or bond ladders for predictable cash flow.
Reviewing accounts: Ensure your 403(b), IRA, and taxable accounts align with your overall goals and time horizon.
Tip: A portfolio review isn’t a one-time event. Revisit your allocation at least annually—or sooner if market conditions or your goals change.
5. Don’t Overlook Estate and Legacy Planning
Retirement isn’t just about spending your savings—it’s also about protecting them. Make sure your estate plan reflects your current wishes:
Update beneficiaries: Periodically review designations on your 403(b), IRA, life insurance, and other accounts to make sure they are up to date.
Establish or update a will or trust: You may need a will, trust, or both. In California, high property values and costly probate can make a trust valuable for avoiding court delays and expenses, while a will ensures your wishes are documented for anything outside the trust. Consider talking with a professional to determine your needs.
Consider charitable giving: Claremont residents often generously support local causes. You can integrate philanthropy into your financial plan in a tax-efficient way. For example, you can donate appreciated stock instead of cash (avoiding capital gains taxes), make qualified charitable distributions (QCDs) directly from your IRA if you’re over 70½, or establish a donor-advised fund to plan gifts over time.
Tip: An estate attorney and financial advisor can structure your plan to help protect your assets and reduce taxes for your heirs.
Plan Confidently with Local Expertise
Planning for retirement is complex, especially in high-cost areas like Claremont. But you don’t have to do it alone. At Evermont Wealth, we specialize in helping retirees and pre-retirees build tax-smart, sustainable income strategies that reflect their values and lifestyle.
Schedule a complimentary call with a fiduciary financial advisor to see how we can help you design a plan tailored to your goals.
This material was written in collaboration with artificial intelligence (ChatGPT) derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.