The dream of early retirement in California is enticing. Waking up without an alarm, spending more time with family, traveling, or finally diving into long-neglected hobbies all sound ideal. However, it’s well-known that these goals come with a price tag.

In California, where housing, healthcare, and everyday expenses often exceed national averages, the real question becomes: can your savings truly sustain the lifestyle you envision? Early retirement is possible for many but requires careful planning.

This blog from Bulman Wealth Group explores the realities of retiring early and how to adapt your financial strategy to meet the unique challenges of retirement planning in California.

The Realities of Early Retirement: Risks and Considerations

Here are several key factors to consider when retiring early:

• Social Security timing: Claiming Social Security before full retirement age (66-67) reduces your monthly benefit for life. Retiring at 62 can lower your checks by up to 30%. Early retirees need to cover this gap with other income, which can strain savings.

• Longevity risk: With high costs for housing, healthcare, and daily expenses, one of early retirement’s biggest challenges is making your investments last, often for 20 to 30 years or more.

• Sequencing risk: Market performance in the first few years of retirement can significantly impact how long your money lasts. If the market drops and you’re withdrawing income simultaneously, it can accelerate depletion, especially if you’re not adjusting your spending or investment strategy.

• Healthcare gaps before Medicare: Medicare starts at age 65, so if you retire earlier, you’ll need to pay for private health insurance, which can be costly.

Early retirement requires a strategy that considers timing, risk, and flexibility. Bulman’s financial advisors in California help individuals and families navigate these challenges with tools and insights designed for today’s retirement needs.

Maximizing Your Retirement Income While Minimizing Taxes

Generating income in retirement is only half the equation—keeping more of it requires thoughtful planning, especially in California. The state’s tax structure and rising costs can affect your bottom line. That’s why managing both income and taxes is key to maintaining the financial confidence California retirees strive for.

Potential Ways To Increase Income

Consider these options to maximize retirement income:

• Investing with purpose: A diversified portfolio tailored to your risk tolerance and time horizon can support steady growth without unnecessary exposure to market risks.

• Social Security and pension optimization: Timing your benefits or choosing the right payout option can increase your monthly income and reduce strain on other assets.

• Part-time work or consulting: Many generate income by staying engaged in their field or launching a passion project, helping delay withdrawals from retirement accounts.

• Real estate: Renting out a property, downsizing, or leveraging equity can add a supplemental income stream or lower ongoing expenses.

Working with an advisor to build a detailed cash flow model allows you to “stress test” your plan. What happens if inflation spikes, your portfolio underperforms, or healthcare costs double? Preparing for these scenarios now helps create flexibility and stability down the road.

Tax-Efficient Investment Planning

Managing your investments through a tax lens can substantially improve your after-tax income. Here are strategies to consider:

• Tax diversification: Holding a mix of taxable, tax-deferred, and tax-free accounts offers flexibility when deciding which accounts to draw from each year.

• Capital gains planning: Long-term gains (assets held more than a year) are taxed at lower rates—0%, 15%, or 20%, depending on income—compared to short-term gains, which are taxed as ordinary income.

• Interest and dividends: Qualified dividends receive favorable tax treatment, while interest from taxable bonds is taxed at regular rates. Municipal bonds may offer tax advantages, depending on your situation.

• Tax-loss harvesting: Selling losing investments to offset gains can lower your tax bill. Losses beyond your gains can be carried forward for future use—just be mindful of the IRS wash sale rule.

RMD Withdrawal Strategies

Required Minimum Distributions (RMDs) begin at age 73. These mandatory withdrawals from traditional retirement accounts can push you into a higher tax bracket, and skipping them results in steep penalties.

RMD tax strategies include:

• Taking modest withdrawals in low-income years before RMDs begin
• Converting a portion of your traditional IRA to a Roth IRA in advance
• Coordinating distributions with deductible expenses like long-term care costs

Leveraging all available retirement tax benefits in California can reduce your tax burden and help stretch your savings further.

Securing Your Health and Legacy in California

Early retirement in California offers more time to enjoy life, but also more years of healthcare costs.

Health Coverage Before Medicare

Retiring before 65 means covering the gap with COBRA, a spouse’s plan, or Covered California—often costly for higher-income households. Be sure to factor this into your budget and withdrawal plan.

Medicare and Long-Term Care

Medicare covers basic needs but has gaps. Many retirees add Medigap or Medicare Advantage for extra coverage, but extended care like nursing homes or in-home support isn’t included. Long-term care planning in California is essential, whether through hybrid insurance, savings, or self-funding.

Healthcare costs can quickly strain your savings, so flexibility is key to protecting your finances and care choices.

Estate and Legacy Planning

Retirement is also a time to consider what you’ll leave behind. From revocable living trusts to TOD designations and powers of attorney, there are ways to simplify asset transfer and avoid probate.

Legacy goes beyond dollars and documents. For many, it means charitable giving through a donor-advised fund, creating education accounts, or leaving behind meaningful messages for loved ones. The choices are personal and powerful.

Bulman Wealth Group Offers Insight for Retirees in Roseville and Temecula

California communities vary widely, and so do the financial needs of their retirees. That’s why working with an advisor who understands your region can make a meaningful difference.

The Bulman Wealth Group combines statewide experience with local insight. Our Roseville, CA, financial advisor professionals and the financial advisor Temecula team work with retirees who want more than a one-size-fits-all plan.

We offer guidance personalized to your goals, values, and location, bringing clarity to your finances whether you’re retiring early or planning for the years ahead.

Reach out today to schedule a consultation.