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6 Tax Planning Strategies for Your Accumulation and Decumulation Phases

Admin • September 19, 2023

Your priorities, how you spend your time, and how you generate money to provide for your essentials are drastically different in various stages of your life.

 

In your early working years, you’re gaining skills, experience, and knowledge while you build a career and potentially a family. In the middle of your life, you’re experiencing exciting growth and opportunities and moving through your high-earning years. And finally, as you make your way to the career finish line, you start to focus on how you can maximize both your time and money as you make your way to retirement.

 

These two distinct phases in the wealth-building process are typically known as the accumulation and decumulation phases.

 

Defining the Terms

Your financial accumulation phase is the portion of your life where you are aggressively saving and investing—it includes your prime working years right up until you retire. The decumulation phase of your life happens when you stop working and start to draw from your amassed wealth to provide for your everyday expenses.

Effective accumulation and decumulation strategies involve strategic tax planning because taxes can have a significant impact on both phases.

 

Grow Baby Grow: Tax Planning Strategies for Your Accumulation Phase

When you’re working to grow your wealth as quickly and efficiently as possible, it’s important to take advantage of the many great tax strategies available to you. Overall, you’ll want to focus on reducing your tax liability where you can while also reducing your future taxes in retirement. This delicate balance will ebb and flow throughout your working years as your income and expenses fluctuate.

Consider these three tips if you’re in the wealth accumulation phase of your life.

 

1.  Utilize tax-advantaged accounts.

These accounts offer tax advantages such as being tax-exempt (after-tax contributions not subject to ordinary income tax) or tax-deferred (pre-tax income contributions will be taxed later).

Some common examples of these accounts include:

  • 401(k)s. Your retirement contributions help to decrease your taxable income in the year you This lowers how much you pay now, and allows you to grow your wealth in other ways. You can begin withdrawing money from your 401(k) at age 59.5 without a penalty. If your employer offers a matching contribution, always contribute enough to get the full match.
  • Traditional Similar to your 401(k), your contributions are tax-deductible and will be taxed as ordinary income when you withdraw money in retirement.
  • Health Savings Accounts (HSA). If you are on a high-deductible health insurance plan, you can contribute to an HSA. These accounts allow you to make tax-free contributions, and experience tax-free growth and tax-free withdrawals (when used for qualified medical expenses). Contributing to these accounts yearly can greatly help ease your medical expenses in retirement.

The amount you’re able to contribute to these accounts will vary throughout your working years. While raising a family, your contributions may be leaner, but when your nest is empty, you might be able to ramp up your contributions to the full contribution limits. The important thing is to try to always contribute something. The accumulated contributions year after year can truly add up!

 

2.  Use investment losses to your advantage.

Reducing your tax liability in the accumulation phase is crucial for building wealth. One way to accomplish this is through tax-loss harvesting. This tax strategy includes selling an asset that has depreciated (capital loss) in order to offset the taxes you owe on any capital gains or income you’ve received.

For example, Asset A has appreciated by $2,000 and Asset B has depreciated by $2,000. You can sell Asset B at a loss to offset the capital gain of Asset A. Your gain and loss have come to a wash, leaving you with no tax liability on these two assets. An experienced financial advisor with tax knowledge can help navigate your portfolio and advise you on this strategy.

 

3.  Consider Roth conversions.

If you’re in a strong financial position yet earning less than what you expect to make in later years, consider converting some of your contributions from a traditional retirement account into a Roth IRA. You’ll pay taxes on the converted amount now but will enjoy tax-free withdrawals during retirement.

This can be especially beneficial if you expect to be in the same or higher tax bracket during retirement or earn too much ( $153,000 for single filers and $228,000 for married joint filers in 2023 ) to contribute to a Roth IRA the traditional way.

 

Relax and Enjoy: Tax Planning Strategies for Your Decumulation Phase

As you finally make your way into retirement, your finances will drastically change. You’ll no longer be focused on accumulating and growing but rather preserving and spending (strategically).

Consider these three tips if you’re in the decumulation (retirement) phase of your life.

 

1.  Strategically manage your withdrawals

How you withdraw your money from your investments can greatly affect how your remaining money can continue to grow.

It’s wise to withdraw from your taxable accounts first (savings accounts, brokerage accounts, etc.) because you’ve already paid income tax on your contributions. Next, withdraw from your tax-deferred accounts (traditional 401(k)s and IRAs). When making withdrawals from these accounts, pay attention to the required minimum distributions (RMDs) so you can avoid nasty tax penalties.

Save your extra special accounts—like your Roth IRA—for the very end because these withdrawals are completely tax-free and should be left to grow for as long as possible. Your Roth IRA withdrawals do not count toward your yearly income, which can benefit you when you start considering your social security benefits.

 

2.  Optimize your Social Security benefits

Your social security benefits are subject to taxation depending on your annual income (including the income you receive from some of your retirement accounts). Delaying your benefits and instead relying on your retirement accounts and other investments can help prevent you from paying taxes on your social security benefits. Delaying your benefits will also increase the amount you receive each month (until age 70).

 

3.  Consider the location of your retirement.

Where you choose to settle down and live out the rest of your days can have a significant impact on your retirement income. Some states—Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming—do not tax income at all, including your Social Security benefits, retirement distributions, and pensions. This can help you save significantly in your golden years. Other states tax income but have special provisions for retirees.

Property and sales tax can also vary greatly from state to state. In order to stretch your retirement savings, it’s important to look at how your budget will fare in light of various taxes. Find out the specific tax laws in the state you’re looking at retiring in and plan accordingly.

 

Strategically Plan Your Taxes with Five Pine Wealth Management

Tax planning is a powerful way to grow and preserve the wealth you work so hard to earn. Our tax planning financial advisors can help you minimize your tax burden, adapt your financial plan when new laws and regulations are implemented, and navigate your retirement contributions and accounts.

 

We offer comprehensive tax planning services for every stage of life. To connect with us and schedule a free discovery call, visit our website , give us a call at 877.333.1015, or shoot us an email at info@fivepinewealth.com

The Best Long-Term Investment Strategy? Stay Invested, Stay Calm

June 20, 2025
When markets are calm, investing can feel easy. You contribute regularly, watch your portfolio grow, and start picturing that future vacation home or early retirement. But when markets get volatile, everything changes. Suddenly, headlines are full of dire warnings. Account balances fluctuate. And the urge to do something can feel overwhelming. At Five Pine Wealth Management , we understand how emotional investing can become during periods of market uncertainty. One of the most important things we do as fiduciary financial planners is to help our clients stay grounded when the market gets choppy. Let’s walk you through how we approach investment risk management and why having a clear, disciplined philosophy matters most when volatility strikes. Our Philosophy: Think Long-Term, Not Next Week When markets are moving fast, it is easy to think that the “best long-term investment strategy” must involve taking action to avoid losses or chase gains. The reality is usually the opposite. Reacting to market noise can often do more harm than good. In fact, one of the greatest risks to long-term returns is making emotional decisions in response to short-term events. We coach our clients to stay focused on their long-term financial plans and goals. Volatility is a feature of markets, not a flaw. By designing portfolios with realistic expectations for ups and downs, we help clients stay invested through all market environments. Here is what this looks like in practice: We use broadly diversified portfolios built around low-cost ETFs. We focus on asset allocation aligned with your time horizon, goals, and risk tolerance. We do not chase trends or attempt to time the market. We regularly review and rebalance portfolios based on your financial plan, not headlines. In short, your portfolio is designed to ride out volatility, not avoid it entirely. Fiduciary Financial Planning: Advice in Your Best Interest There is a great deal of noise in the financial world, particularly during turbulent market conditions. One of the most significant ways we help cut through it is by being fiduciary financial planners. That means we are legally and ethically obligated to act in your best interest at all times. We are also fee-only advisors. We do not receive commissions for recommending one investment over another. Our primary agenda is to help you reach your goals. During market volatility, this matters more than ever. Too many investors fall prey to sales pitches disguised as “solutions” to market risk. We focus on education and long-term planning rather than quick fixes. Being a fiduciary allows us to focus on what serves you best: Keeping you aligned with your personal goals and values Helping you tune out market noise and media hype Offering sound, research-backed guidance without conflicts of interest Your Coach Through Emotional Market Cycles One of our most important roles as financial planners is helping clients manage the psychological side of investing. It is one thing to know, intellectually, that markets will recover over time. It is another thing to watch your portfolio drop 15% and not feel anxious. Market downturns create powerful emotions. Fear. Doubt. Sometimes, even panic. As humans, our instinct is to take action to relieve those feelings, even when the logical course is to stay invested. That is where we come in. We help coach clients through these moments so they can avoid costly mistakes like: Selling during a downturn and locking in losses Chasing the next hot trend during a rebound Over-concentration in “safe” assets out of fear We remind clients that volatility is a normal part of the market. Markets have experienced recessions, wars, pandemics, and political turmoil before. They will again. Over time, markets have historically rewarded patient investors who stayed the course. When you work with us, you gain a trusted partner who is here to talk through your concerns, offer perspective, and help you make decisions that serve your long-term goals. Why Staying the Course Actually Works It may seem counterintuitive, but reducing activity during market volatility often yields better outcomes. Consider this: From 1999 through 2018, if an investor missed just the 10 best days in the S&P 500, their overall return would have been cut nearly in half . Many of the best market days happen very close to the worst ones. Trying to time the market is a challenging task, even for seasoned professionals. By maintaining a disciplined investment approach and staying fully invested, you ensure that you are there for both the recoveries and the long-term growth that markets provide. Our role is to help you build a portfolio designed for precisely this kind of staying power. We structure your investment mix to help you weather market cycles without having to guess what will happen next. Educating Clients About Normal Market Cycles Another key aspect of fiduciary financial planning is helping clients understand what is “normal” in the market. Volatility is not a sign that something is broken. It is a natural part of how markets function. In fact, without volatility, markets would not offer the returns that make long-term investing so powerful. We work with clients to help them see: Why some years will be down, but others will be very strong Why trying to avoid all losses is neither realistic nor necessary How staying invested through cycles often leads to far better outcomes than jumping in and out of the market Perspective is everything . The more you understand market behavior, the less likely you are to make emotional decisions during downturns. Different Stages, Same Principles Our approach also adapts to the varying needs of clients at different stages of their financial journey. For clients in their 40s to 60s: We may focus on prudently preserving and growing wealth. We help manage sequence-of-returns risk as you approach retirement. We may emphasize income planning and portfolio sustainability. We ensure that your investment mix aligns with your evolving goals and risk tolerance. For clients in their 30s: We provide education about typical market cycles (especially if this is their first experience with volatility). We coach clients to take advantage of their longer time horizons. We help younger investors see downturns as buying opportunities, not threats. In all cases, we are committed to helping clients invest with confidence, regardless of the headlines. Ready to Build a More Resilient Investment Strategy? Market volatility will always be part of investing, but it doesn't have to derail your financial goals. As your trusted financial advisor Coeur d'Alene team, we're here to help you navigate market uncertainty with confidence through our comprehensive financial planning approach. Contact Five Pine Wealth Management today to discuss how our investment philosophy and comprehensive financial planning approach can help you navigate market uncertainty with confidence. To see how we can help you support your financial goals, send us an email or call us at 877.333.1015.  Whether you're looking to preserve the wealth you've already accumulated or build a foundation for long-term growth, our team has the experience and commitment to help you stay focused on what matters most: achieving your financial goals.

From Full House to Financial Freedom: Smart Money Moves for Empty Nesters

May 23, 2025
The day your last child leaves home hits differently. It’s not just about the quiet hallways or fewer groceries in the cart. It’s the moment you realize that the life you’ve known for 20+ years is evolving into something new. For many, that change is deeply emotional. But it’s also a golden opportunity. At Five Pine Wealth Management, we work with parents who are entering this new season of life. Maybe you’re celebrating. Perhaps you’re feeling uncertain. Likely, you’re feeling a mix of both. This new chapter comes with financial freedom and decisions to match wherever you land. Let’s explore the smart financial moves you can make as empty nesters. Empty Nesters: A New Financial Season Meet Rob and Dana. After 25 years of raising three kids, their youngest finally left for college last fall. Their house, once bustling with backpacks, soccer cleats, and half-eaten cereal bowls, suddenly felt oversized and eerily quiet. They weren’t used to grocery bills being cut in half or weekends without games and activities. But what really surprised them? Just how much less money was going out each month. They came to us with a familiar feeling: a mix of excitement and uncertainty. "We think we're in a good place," Dana said. "But are we doing what we should be doing?" This is where a financial check-in becomes vital. With fewer day-to-day expenses and more flexibility, this is a time to refocus your finances. Here’s where to focus: Revisit your monthly budget. Your spending needs have probably changed. Without dependents at home, you may find new flexibility. Redirect those dollars toward long-term goals. Refresh your financial goals. That dream trip to Italy or the kitchen renovation you’ve put off? Let’s pencil it in, but also ensure your retirement accounts are getting the love they need. Update your estate plan. Now that the kids are young adults, your wills, healthcare directives, and beneficiaries may need adjusting. Freedom looks different for everyone, but for many, it starts with clarity. Pre-Retirement Planning: Your Next Big Financial Milestone For most empty nesters, retirement is no longer a distant concept—it’s getting real. Pre-retirement planning becomes a critical focus, especially in your late 40s to mid-60s. This is often the highest-earning period of your life and the sweet spot for pre-retirement planning. Here’s what we help our clients prioritize: Maximizing retirement contributions : As an empty nester, your cash flow could increase by 12% or more . Now’s the time to supercharge your 401(k), IRA, or other investment accounts with that extra cash. If you’re 50 or older, take advantage of catch-up contributions. Evaluating your risk exposure : Is your portfolio still aligned with your risk tolerance and timeline? Consider your tax strategy: With fewer deductions (like kids at home) and possibly a high-earning year, you may want to explore Roth conversions, charitable giving, or other tax-aware strategies. Running retirement projections : We help clients answer big-picture questions like: When can I retire? Will I have enough? What lifestyle can I realistically support? These aren’t always easy questions, but they’re essential. Planning for healthcare : Don’t wait until 65 to think about Medicare. Explore long-term care insurance and out-of-pocket expectations now. Rob and Dana sat down with us to run a retirement analysis. With only 8 years until Rob planned to retire, we helped them rebalance their portfolio to reduce risk, evaluate their pension and Social Security options, and make a plan to pay off their mortgage early. The result? They now have a clear retirement date and peace of mind. Should I Downsize My Home? One of the most common questions we get from empty nesters is, “Should I downsize my home?” It’s not just a financial question. It’s an emotional one, too. That house holds birthday parties, graduation photos on the stairs, and a dent in the drywall from a wild game of indoor tag. But it may also hold higher property taxes, more space than you use, and maintenance costs that don’t serve your current lifestyle. When deciding whether to downsize, we walk clients through: Total cost of ownership : What are you paying for the space? Emotional readiness : Are you ready to let go of the home? What would moving free up? : Cash for retirement? A move to your dream location? Family needs : Will your kids (or grandkids) be visiting regularly? Would a smaller home still support that? Downsizing doesn’t always mean moving into a tiny condo. Sometimes it means relocating to a one-level home with less yard or trading square footage for a better lifestyle. For Rob and Dana, downsizing meant moving to a townhome closer to their daughter and walkable to their favorite coffee shop, all while cutting their housing costs by nearly 35%. Give Yourself Permission to Dream Again One of our favorite things about working with empty nesters is helping them rediscover what they want. For years, life revolved around the kids. College tours. Dance recitals. Saturday mornings spent on the soccer sidelines. You were investing in their future. Now, it’s time to invest in yours. That might mean: Launching the business you put on hold Traveling during off-peak seasons (because you can!) Picking up a new hobby or volunteering more Creating a legacy through charitable giving or a family foundation Whatever it is, we want to help you align your money with your vision. Ready to Rethink the Next Chapter? This stage of life is full of opportunities, but it can also raise big questions. The good news is you don’t have to figure it all out on your own. Whether you're considering downsizing, exploring early retirement, or just want to know you’re on the right path, Five Pine Wealth Management is here to help you plan wisely, invest intentionally, and live fully.  Take advantage of this pivotal financial moment. Call (877.333.1015) or email us today to schedule your empty nester strategy session. The empty nest doesn't have to feel empty. It can be the launch pad for your next chapter of financial success.