Fall Tax Planning Checklist for Pre-Retirees Between $2M-$8M
Episode 52
Fall Tax Planning Checklist for Pre-Retirees Between $2M-$8M
Published on Sept 16th, 2026
Episode Summary
Episode 51 of Retirement Tax Matters addresses how high-net-worth retirees in the $2M to $8M range should evaluate managing a six-figure Health Savings Account during retirement. Garrett Crawford, CFP® and Adam Reed break down the trade-off between saving an HSA for late-in-life tax-free compounding versus spending those funds earlier to pay qualified health expenses. The conversation examines the administrative hassle of maintaining decades of medical receipts, highlighting why trying to over-optimize account mechanics into your 80s can create unnecessary friction for adult children and healthcare powers of attorney. Garrett highlights the estate tax trap where leaving an unspent HSA to non-spouse heirs converts the entire balance into taxable ordinary income on a single tax return. The show also explores how large out-of-pocket medical bills exceeding 7.5% of Adjusted Gross Income allow high-expense retirees to offset taxable Traditional IRA withdrawals, preserving tax-free accounts for Medicare premiums and everyday healthcare costs. Ultimately, using an annual tax-return-driven framework helps retirees balance mathematical formulas with practical utility, aiming to bring their HSA balance near zero by the end of life.
Key Tax Planning Questions
Question 1: Why is reviewing my paystub in the fall important?
A core part of our tax return driven financial planning framework depends on having a clear understanding of your tax return so it can drive better financial planning decisions. For working pre-retirees, understanding what is happening on your paystub is just as important to help prevent tax surprises and inform your planning before the December 31st deadline.
In my experience working with clients, paystubs are notoriously confusing. When I ask a client how much they earn at work, I rarely get a straightforward answer. Someone might quote the net deposit hitting their checking account every two weeks. Another person quotes their salary left over after 401(k) contributions, while someone else mentions their last year’s AGI amount without understanding the difference between it, their W-2 Wages, and the amount listed on their paystub. There is widespread confusion about salary numbers and what amount is actually getting taxed.
Corporate paystubs are arranged with a litany of line items, including pre-tax deductions, post-tax deductions, employer health insurance, HSA contributions, 401(k) deferrals, benefit offsets, and stock options with unique withholding just to name a few. These overlapping lines create traps where pre-retirees inadvertently over-withhold or under-withhold, leading to an unexpected tax bill the following spring.
Being a pre-retiree who wants to lower lifetime taxes and evaluate whether strategies like Roth conversions fit your situation before retirement and Social Security begin depends on understanding the synergy between your tax return, your fall income projection, and your paystub. Reviewing a September, October, or November paystub should help to provide you or your financial planner the data you need to make informed financial planning decisions while there is still time to act.
Question 2: Why do you mention there needing to be a season of pause for pre-retirees in December?
End-of-year tax planning is one of the biggest areas working pre-retirees miss. It is easy to assume that because you are still working a job you have held for decades, your financial picture is predictable and formal year-end planning is something only retired people need to do.
For pre-retirees in the $2M to $8M asset range, you actually face all the complexity of a retired person on top of working income. If you have a sizable taxable brokerage account, the end of the year can get chaotic. You have to deal with taxable interest, reinvested dividends, and potential capital gains & distributions in late November and December that can be difficult to control.
Establishing a season of pause in November and December gives you or your financial planner space to let the dust settle. Slowing down transactions during these final weeks allows you to look at real numbers before making decisions about Roth conversions, retirement plan contributions, or discretionary account withdrawals. If you need cash for a project or purchase, delaying that distribution until January keeps your current-year tax picture stable.
Most $2M-$8M pre-retirees I’ve worked with has the flexibility in their cash flow to do this. It’s more about creating the habit to slow down and think about financial planning before December 31st (and not waiting until April 15th!)
Full Episode Transcript
Adam: Good morning, and welcome to Retirement Tax Matters. I'm Adam Reed. This is Garrett Crawford, our resident CFP® professional, and it's that time of year, Garrett. We've made it to September, made it to the back half of this year. Now all the fun begins.
Garrett: I'm preconditioning myself. This is my 15th cup of coffee this morning.
Adam: Ready to rock and roll. Yeah. And so if any of you are flying into Knoxville and thinking, "I wonder if I'm going to see Adam and Garrett out and about," you won't. This is kind of the start of our busy season because we're doing tax return-driven financial planning. We're making these income projections, or taking the income projections maybe we made in the summer or coming out of the spring, and we're really fine-tuning those now. If you guys want to kind of do that with us or follow along with us, check out the website, retirementtaxmatters.com. We've got the year-end tax planning checklist that really helps you outline what we do and helps you take our framework and go and implement it. A lot of you guys have spreadsheets and great things, but having a good checklist to double-check yourself is key. It also puts you on our newsletter with about 500 other people that are getting weekly drops and daily nuggets. Garrett wouldn't have a life if it was daily.
Garrett: 25th cup of coffee.
Adam: Live streaming 24/7. No, once a week you get a little blurb about a tax planning topic or a retirement planning topic. Totally worth your time. Go check out retirementtaxmatters.com. In light of that, we wanted to do a two-part series, or maybe a phase one and phase two.
Garrett: Yeah.
Adam: Today we wanted to dive into what this time of year looks like for pre-retirees, what you don't want to miss and what's important. Next week, we're going to follow up with those of you who are in retirement: what you should be doing and looking at in the last quarter of the year. Today, we wanted to kick off by checking in with those who are still working. If you're thinking, "Oh, well, I'm retired," remember a lot of you may still have a spouse that's working, meaning there is still earned income on the tax return. So don't just dip out of this. There's valuable information here that will overlap with next week as well. With all that being said, Garrett, where do we start? The interesting thing about these pre-retirees is that most of them have already accumulated their wealth; they're in this $2 million to $8 million space. Maybe there's a larger brokerage account. You have the challenges of managing larger accounts like a retiree, but you also have earned income, you're likely in the peak earning years of your career, and you've done pretty well for yourself to accumulate $2 to $8 million. Help me navigate what people need to be checking in on and aware of as they navigate these last couple years of W-2 or 1099 income along with these large accounts they've worked so hard to save.
Garrett: Yeah, sure. I guess I would start off with two big punches. The first one is that this is episode number 52, so we have a whole library of content on this. The question you asked is exactly what we talk about every single week: what should people be doing to get ready for retirement, and what is year-end tax planning? 52 weeks means there is a free class right on retirementtaxmatters.com where you can go through all those videos. The overarching theme today is September year-end tax planning. Another big punch here is the number one thing I'm seeing pre-retirees and retirees fail to do: simply making an estimate of what their income is going to be on December 31st. The whole premise of our podcast is that people need to look at what their income will be at the end of the year so they can make informed financial decisions now. That way, you don't show up at your tax preparer's office next February or March, find out your final income, and ask, "Well, should I do something?" only for them to say, "No, it's too late." I wanted to break this up into two different episodes: retirees, and this week, pre-retirees' year-end tax planning. Anecdotally as a financial planner, one of the biggest things I've noticed in my planning, which is always evolving, is that every year I do this, I learn something different and fine-tune things a bit more. I find myself constantly talking to clients who are doing year-end tax planning, and I'm asking for at least two or three pay stub updates a year. Today is September 10th as we're recording, and we're going through Q3 estimated taxes. For a lot of pre-retirees, those investments may be kicking off capital gains, or you might not have enough federal tax withholding done at work, leaving you with a surprise tax bill the following April. Right now, my clients' tax preparers are sending them reminders asking, "Hey, did you make your Q3 estimated tax payment?" My experience has been that while I love tax preparers and work with them all the time, they can fall into the trap of setting a safe harbor rule based purely on last year's income. That's where those quarterly estimated taxes come from. But what a tax preparer might not factor in is that we did a $200,000 Roth conversion in 2025, meaning those safe harbor estimated tax payments are double what they actually need to be. Part of this year-end tax planning involves clients emailing me asking, "Hey, Q3 tax payment is coming up; do I actually need to pay that?" Sometimes we bring in a CPA, but what I'd really like to focus on, other than quarterly estimated taxes, is how integral the pay stub is for the working pre-retiree. As technology improves, I'm asking for this document more and more. I'd ask this question: if you're working with an advisor or doing it yourself, how often do you pull out your September, October, or November pay stub to use as a baseline for end-of-year tax projections? I haven't met too many advisors who are even asking for tax returns, which is the foundation of what we do, let alone asking for your most recent pay stub to ensure you don't hit a federal withholding issue and that your end-of-year income tax projections are accurate. I think that's rare air we travel in.
Adam: This is probably the time to announce we're no longer tax return-driven financial planning; we're pay stub-driven financial planning! But no, both are important.
Garrett: Exactly. The premise for this episode is that for retirees, the tax return is the most important document you're not using to drive your financial planning. For the pre-retiree, or the household with a working spouse, the pay stub is the second most overlooked document that isn't being incorporated into end-of-year tax projections. I see my clients' pay stubs, maybe 30 to 75 different ones, and they're never the same. They are so confusing based on how HR sets them up. Even at our own office, it can be hard to interpret what is a pre-tax versus post-tax deduction, or whether an amount is annualized, monthly, or semi-monthly. I still have a hard time with terms like "bi-monthly" - does that mean every two months, or twice a month? The very basic step with a pay stub is just trying to figure out the cadence of payment, because your payment dates differ from the actual dates worked. It's complicated, just like reviewing a tax return. The hard truth for a lot of people is that even if it's complicated, and even if you usually only look at the net earnings at the very bottom, that information is critical. It allows you to make an informed end-of-year decision about a Roth conversion, a distribution, or whether you should save more into a solo 401(k), a Roth account, or a pre-tax account. My soapbox here is that we have got to pay attention to the pay stub. It's going to feel like learning a new language sometimes, but you need to understand what all those numbers mean.
Adam: The pay stub is crucial. Anybody who has bought into tax return-driven financial planning and making income projections will find the pay stub pivotal if they or their spouse are working. It's just another weapon in your toolbelt. Double-click on how that integrates with larger brokerage accounts, specifically regarding interest and dividends. You have all these retirement assets and you're getting closer to retirement, but you're still working. How do those integrate, and what should people look for as we approach the end of the year?
Garrett: To answer that, I have to back up a bit. Just as we shouldn't assume tax returns are the same every year, we shouldn't assume pay stubs stay the same either. People get promotions, equity incentives, or additional distributions. That complexity alone can shift financial planning. You might not find out until October or November that you're getting a $60,000 bonus at work, which impacts everything. Bringing this home to our niche audience: everything I've said applies to most people, but for our audience with between $2 million and $8 million, it's no surprise that you likely have a successful job, above-average income, and high tax rates. You're also going to run into what we'll talk about more in depth next week: the rise of the brokerage account. You're probably maxing out a Roth or traditional 401(k) at work and adding money to a joint brokerage account, where you start dealing with taxable interest, dividends, and long-term or short-term capital gains. We sometimes refer to that as "phantom income" because it's not money that actually hits your checking account, yet you still get taxed on it. These brokerage balances can grow much faster than people anticipate. You might be on cruise control for years adding monthly savings, and suddenly a $500,000 account becomes $710,000, and then $815,000. It starts kicking off ordinary dividends that get reinvested. On top of a promotion or limited ability to shelter income, your AGI jumps, pushing you from the 32% bracket to 35% or 37%. It all comes back to a coordinated approach: having a firm grasp on your pay stub and compensation for the year, while keeping a watchful eye on assets growing exponentially in this bull market.
Adam: Another side to that coin is people who have worked hard, reached their peak earning years, and decide, "I'm not ready to retire, but maybe I want to work part-time or scale back my hours." If you drop from the 24% bracket down to the bottom of the 22% bracket, knowing you'll be back in the 24% bracket in retirement, there are great opportunities. You can review your pay stub, project your income bracket, and execute Roth conversions or other financial strategies while still working. It goes both ways, whether you're climbing the ladder and getting bonuses, or cutting back to two days a week. Some people assume that because they still have earned income, there's no space to execute these strategies. That's why the pay stub is a secret weapon for pre-retirees heading into year-end. Lastly, Garrett, I've heard you mention incorporating a "season of pause" in November and December. Can you explain what that is and why it's so important?
Garrett: Having periods of rest built into your framework is essential. You and I love using Sundays to rest and reset. But as you and I speed up with our clients, this becomes sprint mode for us as we pay attention to all the details. End-of-year tax planning is critical to minimize surprises. I have clients with brokerage accounts who are thinking about the following January and February, and I teach them to lean into this idea: by October, November, or early December, we are in execution mode regarding Roth conversions, rebalancing, or harvesting capital gains. That is not the ideal time to suddenly pull out $50,000 or $60,000 for a new car. As we do end-of-year tax planning, I ask clients to bring the year's spending to a close. I'm not telling them to spend less; I'm telling them, "Get that money out before we start the year-end tax plan." If you want to do a home project, pull the funds in September or early October so we can navigate November and December without additional surprises. Slowing down transactions in investment and retirement accounts allows us to plan better. High-income pre-retirees with ongoing cash flow can usually make it from November 15th to January 1st on existing cash, helping us reduce aggregate taxes for the year.
Adam: That concludes our episode for pre-retirees. Next week, we'll touch base with those in retirement to help you navigate year-end. To sum it up, we still believe the tax return is the golden ticket to accurate projections and planning. But for those still working, the pay stub is almost as important, it's right up there at 1A and 1B. Don't minimize or ignore it. I used to delete my pay stub emails immediately, but now I save and review them. It's a vital tool for making smart end-of-year financial decisions.
Garrett: To add an action item for viewers asking, "What do I do with this?": the overarching point is that executing this process saves you money on taxes. If you believe in that, you have two options. Option one: if you're a DIYer, consume content like this, read books, and learn to understand your pay stub. Option two: hire a financial planner to do it on your behalf. Good financial planners worth their salt are doing this for you. Either learn and do it yourself to save money, or delegate it to someone else.
Adam: If you learned something today and enjoyed the content, please like, subscribe, and follow along on Apple, Spotify, YouTube, and all other platforms. Check out retirementtaxmatters.com to grab your free year-end tax planning checklist. It's an all-year tool that really shines right now as we approach year-end. Don't miss your chance to add it to your toolbelt. We appreciate you following along. I'm Adam Reed, this is Garrett Crawford, CFP® professional, and we are Retirement Tax Matters.
Garrett: See you next time.