7 Surprises After 2 Years in Retirement

Tax, spending and mindset shifts this financial planner didn't see coming

It’s been two years since I received my last paycheck and hung up my hat (er, Pradas?) after nearly two decades as a Private Banker.

It’s been wonderful so far, but some things haven’t gone as expected. I considered making this a series but decided to briefly describe these surprises instead.

Leave a comment if you’d like to see a deeper dive into one of these topics!

I haven’t owed income taxes yet.

Despite having a taxable portfolio large enough to sustain me for a couple of decades and executing some hefty Roth conversions, the stars aligned in 2025 and I was suddenly one of the roughly third¹ of American filers who owed zero income taxes.

My taxes are complicated, but here is the gist:

• Rollover K1 losses offset some realized K1 gains.²

• Business expenses offset my minimal business income and then some.

• My rental LLC had losses due to major renovations, and I was able to deduct much of it since my MAGI fell within the phaseout range³.

• Abnormally high itemized deductions in addition to the excess losses above offset dividend income and left room for $75K in Roth conversions. My net ordinary income was flat.

• I had just under $50K of gains and preferred dividends which were taxed at the 0% capital gains rate.

So even with a six figure AGI, my taxable income was just under $50K and my tax rate was 0%. I’m on track for a similar no-tax year in 2026 if I don’t opt for Roth conversions, but this won’t last forever.

Here are some strategies that can help minimize your tax bill:

• Bunch deductions to itemize every other year for maximum impact. In Texas property taxes can be paid in December or January, and you can control the timing of charitable giving manually or with a Donor Advised Fund.

• Harvest capital gains and do Roth conversions when you have room in the 0% tax bracket or to fill up whichever tax bracket you’re in.

• Have some kind of small business even if it doesn’t earn much. This can enable you to deduct some expenses you would have anyway, like health insurance premiums and part of your utilities if you work from home.

• Asset location matters, but so does liquidity. I don’t hold high dividend funds in taxable brokerage, but I do keep 2-3 of expenses in high yielding cash and short term bonds there.

• Rental properties reliably generate tax losses, but that’s because real estate can often be a bad investment. Income = taxes = a good problem to have.

I’ve been comfortable splurging big.

Having observed thousands of retirees over the course of my career, I’m well aware of the tendency to tighten the purse strings and spend less in retirement. For savers, switching from accumulation to drawdown mode can be challenging.

I spent the 6 months leading up to my last paycheck buying things I assumed would be harder to justify later. I un-deferred all conceivable home maintenance, completed two renovations, upgraded furniture, splurged on a designer bag, and took my sisters on a trip to Istanbul. I even stocked up on expensive skin care products.

I was ready to relax into frugality, but to my surprise I’ve remained as comfortable splurging as ever. This is doubtless thanks in part to the ongoing bull market, but I expected it to be harder to pull the trigger on optional big ticket “wants.”

I’ve swiped my credit card happily for all kinds of relatively insane purchases: a $15K spiritual mastermind retreat, a $6K first class flight, even a $4K painting that I kept thinking about 6 months after seeing it in a gallery in Paris (and I’d never bought “real” art in my life).

I’m spending less than expected.

Overall though, I’m still under budget. In the first 12 months I spent 98% to plan, and over the next 12 I spent 90% (or 88% if you adjust my initial spending target for inflation).

My target is an average that includes accruals for new cars every 8 years and periodic home improvements, as well as income taxes. So I should be spending less in years that don’t include those major expenses.

I’m spending much less than projected on everyday expenses though - which is what made room for more of those large splurges. I’ve tracked my spending meticulously for my entire life, so I had a solid sense of my habits and preferences.

But more of my expenses than I realized turned out to be related to my career - the daily routine it required as well as many luxuries that helped me tolerate it.

I rarely bother to get the monthly pedicures or massages I planned. I shop less as I now need a far smaller wardrobe. I eat out less since I’m rarely “on the go” for meals during the day.

I even travel less. Escaping to far flung locations is less compelling now that I can live a leisurely lifestyle - or seek out adventures - every day.

It’s amazing how indulgent it feels to just wake up without an alarm, make a latte at home, and watch the birds play while I decide what to do with my day.

Apparently enjoying the simple life isn’t an old person thing or a childhood thing. It’s our natural state. And what they say is true: it doesn’t cost very much.

I am totally OK doing nothing.

Releasing the cultural conditioning that productivity = value has been gloriously easy.

I was acutely aware that many overachievers struggle without a work identity or a packed schedule, so I assumed that within a few months I would go stir crazy and start writing a book, digging wells in Africa, and running marathons. Or at least DIY some home projects, get through my TBR pile, and pick up tennis again.

Nope, lol.

My bookshelf is littered with titles like Four Thousand Weeks, The Subtle Art of Not Giving a F***, and Do Nothing, which I consumed mainly as a form of fantasy during brief breaks from the chaos of my corporate inbox. But apparently I internalized the messages along the way.

While I have done a few milestone trips, launched this Substack and started doing some very part time financial consulting, on a day-to-day basis I am often downright slothful.

I typically sleep 8.5 hours, journal or do a morning ritual, read newspapers or Substack, workout and walk, and attend a virtual class or fall down an internet rabbit hole. Next thing you know it’s time to get dressed and spend the evening socializing or (more often) binging novels and prestige TV dramas.

Despite the occasional analysis paralysis, I’ve been perfectly content with these occupations - certainly no less fulfilled than I was in my job.

It turns out you really don’t have to retire “to” something.

I might actually enjoy working.

I never considered my compulsive hobby of writing and giving financial advice “work.” I was raised a good Republican capitalist who generally equated work with paychecks, and I was too chicken (and not nearly frugal enough) to try to make a living writing.

But I always found a way to do it. I skipped class in college to write op-eds; I published an anonymous personal finance blog for eight years without even trying to monetize it; and I have spent thousands of hours as an engaged contributor on various financial forums.

As I publish my thoughts regularly here and get to know “real” writers who confidently define reading as research, the idea of transforming my pleasurable pastimes into “meaningful work” with just the flip of a mental switch is tantalizing.

But if this is work…then I might actually be a closet workaholic instead of an introverted money-nerd addicted to screens??

The line between leisure and labor is blurry.

I haven’t been worried about money.

This has been my biggest surprise. Tinkering with increasingly complex financial spreadsheets has long been my preferred coping mechanism for anxiety. Gazing upon the neatly organized columns and rows gives me a satisfying sense of control.

It’s liberating and healthy to recognize this illusion and loosen your grip, but I did not expect retirement to make that easier.

Curiously though, I found that most of the angst around retirement comes from anticipation and deliberation on the front end. Once the decision is made, there’s less to agonize about. It’s simply time to execute.

One More Year Syndrome has a reliable cure, and it’s not more money. Most people pull the trigger in the wake of a personal transition or crisis – a health scare, family issue, restructuring or layoff. Then they figure out how to make the math work.

I didn’t wake up one day and decide I’d finally hit My Number or run one more Monte Carlo simulation that convinced me I’d be fine. Burnout pushed me over the edge and urged me to use my FU money accordingly. At the same time my divorce made me feel invincible; the “worst” had happened and I was fine.

Figuring out early retirement seemed like a comparable cakewalk. And as a bonus, as my nervous system healed I found myself less anxious about everything - money included.

My net worth has risen.

I have helped hundreds of clients understand and implement the 4% rule (or a similar dynamic portfolio drawdown strategy), but it’s wild to see it work with my own money.

Most financial planners and optimizers understandably focus on the “worst case scenario.” We overanalyze every possible downside, from needing long term care for many years to a prolonged bear market and persistently high inflation.

Then for good measure we keep saving until our portfolio could ostensibly survive all these calamities at once.

I braced responsibly for an inevitable market crash and prepared for the most negative of all sequences of returns after abandoning my lucrative career. Then, through squinted eyes, I watched with increasing awe as my balances continued to climb.

By definition, the worst scenario rarely unfolds. Besides, the 4% rule and other safe withdrawal rates are designed to be just that - safe - even if you do suffer through a historically bad market cycle.

As a result, most of us will encounter surplus and abundance in retirement that we never let ourselves anticipate, much less plan for.

This quintessential “first world problem” is a massive privilege. It’s an overlooked responsibility and opportunity.

Exploring the question of how to use our wealth - both in terms of money and time - is what I will continue to explore here. Follow along to join the conversation.

1. I have always heard that roughly half of all Americans pay/owe no FIT, but apparently that has never been true. The ratio briefly popped above 40% in the mid 2000s, but it’s been declining since. Historical charts can be found here if you’re interested.

2. I own a handful of real estate syndications and alternative investments that generate K1s. Typically these partnerships pass along annual losses until they close/sell, at which point they generate a large (if you’re lucky) and unpredictable gain.

3. The passive rental real estate loss deduction allows ‘active participants’ to deduct up to $25,000 against other income, with a MAGI phase-out of $100K - $150K. (Real estate professionals can deduct all losses as they aren’t considered passive.) Any losses you can’t deduct carry forward to the next tax year.

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I help people get organized and use wealth to design a life that feels secure and aligned. A former Wall Street banker and CERTIFIED FINANCIAL PLANNER™, I act as an unbiased advocate without selling products or managing investments. To learn more, visit my website.

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DISCLAIMER: I love writing about the personal, emotional, and practical sides of money, but please remember that my Substack is strictly for educational and coaching purposes. The insights shared here are general in nature and do not constitute specific investment, tax, or legal advice. While I am a CFP® Certificant, reading this does not create an official advisory relationship, and any comments or likes should not be interpreted as client testimonials. For personalized investment advice, please consult a registered financial professional.