Understanding the “Big Beautiful Bill”: The Empty Nest and Pre-Retirement Years

One of the most overlooked life transitions that families face is the move into the empty nest and pre-retirement years. After decades of raising kids, building careers, and managing the many responsibilities of life, this stage can bring both opportunities and challenges—emotionally and financially. Too often, people underestimate how complex this stage really is.

I’ve seen it firsthand with the families I work with. The kids move out, and suddenly you and your spouse are left staring at each other, realizing how much of your relationship revolved around being parents. Divorce rates spike in the 50s and 60s for this reason. While the emotional side of life isn’t always tied directly to money, make no mistake—divorce at this stage comes with a very real financial cost. That’s why investing in your personal relationships is just as important as investing in your retirement accounts.

Tax and Financial Realities in Pre-Retirement

The legislative landscape has shaped what retirement planning looks like today. While tax brackets have not gone up recently, the complexity of deductions, phaseouts, and income thresholds has increased. Families often expect meaningful tax breaks, but the reality is that many of these provisions are narrow in scope, temporary, or apply only to specific income ranges.

For example, the expansion of the SALT deduction between 2025 and 2029 looks significant on paper. But once household income climbs over $500,000, that deduction begins to phase out, disappearing completely at $600,000. Many high-earning households I work with don’t see much practical benefit here, especially if they are also doing Roth conversions, which raise taxable income.

Similarly, credits tied to vehicles and home energy efficiency improvements often fall short because of income thresholds. If your income is above $200,000 (married filing jointly), you’re likely phased out of those benefits altogether. These provisions may grab headlines, but for many families, they don’t move the needle.

Retirement Catch-Up Contributions

On a positive note, those entering their 50s gain access to retirement catch-up contributions. This allows you to save an extra $7,500 into your 401(k) each year and an additional $1,000 into an IRA. For families who have strong cash flow, these extra contributions are a powerful way to boost retirement savings during peak earning years.

But keep in mind: maximizing contributions is only part of the strategy. Tax planning, income management, and aligning your withdrawals with your retirement lifestyle are just as important.

Why Income Management Matters

In your 50s and early 60s, your income is likely at its highest level. While that’s a blessing for saving and investing, it also brings challenges. Higher incomes push families into higher tax brackets more quickly, reduce eligibility for deductions, and complicate strategies like Roth conversions.

Income management at this stage isn’t just about saving—it’s about sequencing. By balancing withdrawals from taxable, traditional, and Roth accounts, families can reduce their overall tax burden and preserve assets longer. This sequencing strategy becomes even more important once required minimum distributions (RMDs) kick in later in retirement.

Healthcare and the Pre-Medicare Gap

Another major financial consideration is healthcare. If you plan to retire before 65, you’ll face several years of bridging the gap until Medicare eligibility begins. Marketplace plans, COBRA coverage, or private insurance can create costs far higher than many families expect. Even those with the financial means to retire early sometimes delay simply because healthcare expenses can consume such a large portion of income.

Social Security Still Matters

Social Security is often misunderstood. You may have heard headlines predicting its insolvency by 2035. While it’s true the system may not cover 100% of promised benefits at that point, Social Security isn’t disappearing. The government will adjust—through some mix of higher taxes, a later retirement age, or means testing.

What’s most important for families is not to remove Social Security from their retirement plan. For a dual-income household deferring benefits until age 70, Social Security could amount to $100,000 per year of income. Removing that assumption makes retirement planning almost impossible, especially for families facing a potential 30 to 40-year retirement.

Housing and Lifestyle Decisions

Your empty nest years are also a time to reevaluate housing and lifestyle. Do you want to stay in your current home, downsize, or move closer to family? How much financial support will you offer your children or even grandchildren, especially given today’s housing affordability challenges? These are deeply personal questions that also carry significant financial consequences.

The key is to align lifestyle decisions with your broader financial objectives. The best financial plans are not just about numbers—they are about making sure your resources support your values and your vision for life after work.

Purpose, Objectives, and Adaptability

This stage of life is a reminder of the importance of purpose. Financial plans that succeed are the ones built around a family’s clear purpose and specific objectives. Objectives will shift as life evolves, but purpose provides stability.

Every plan I create for a family is a living, breathing document. It’s guaranteed to be wrong in the details, because life is unpredictable. But by writing down your purpose and objectives, you create a framework that allows you to adapt with confidence. Families that do this consistently have a much higher probability of achieving their goals.

Charitable Giving and Gifting

For those inclined to support charities or help children and grandchildren, there are opportunities to structure giving wisely. Donor-advised funds can provide tax benefits while enabling long-term charitable strategies. Families also have more flexibility to give directly, whether that’s helping with a down payment on a home or supporting educational expenses.

Even with estate tax exemptions set at historically high levels, planning for how wealth will transfer—both during your lifetime and after—is an important part of the empty nest and pre-retirement stage.

Moving Forward with Clarity

The empty nest and pre-retirement years are both exciting and daunting. With more freedom comes more responsibility to make decisions that balance lifestyle desires, tax implications, and long-term security. And just like in earlier stages of life, success comes from being intentional—about money, relationships, and purpose.

Families who take the time to have these conversations, and to build strategies around them, are far better prepared for the years ahead.