The Retiree's 12-Point Financial Health Score: Is Your Retirement Secure?

You've made it to retirement. The accumulation game is over. Now comes the harder part: making your money last while navigating RMDs, Medicare, taxes, and the reality that you can no longer earn your way out of a mistake.

The distribution phase is fundamentally different from the accumulation phase. You're not building wealth anymore you're optimizing it. Every dollar needs to work harder. Every tax decision matters more. Every protection gap becomes more dangerous as your ability to recover diminishes.

This is why we developed the Retiree's 12-Point Financial Health Score a measurable framework that forces clarity on exactly where you stand.

Below is the retirement version, designed for those ages 65 and older who are living off their accumulated assets. Score yourself honestly. The goal isn't comfort, it's to identify gaps before they become crises.

How It Works

Twelve items. Four categories. Each item is worth one point, you either meet the benchmark or you don't. No partial credit. This forces clarity, your withdrawal rate is either sustainable or it isn't. Your RMD strategy is either documented or it's not.

Category A: Income Sustainability

These three points measure whether your income strategy will last as long as you do.

1. Withdrawal Rate Sustainability

Your portfolio withdrawal rate is consistent with long-term sustainability given your age, risk tolerance, and legacy goals. The benchmark: current withdrawal rate from your portfolio is 4-5% or less (adjusted for age and flexibility), with a documented guardrails strategy for market downturns. If you're withdrawing 7% because the market has been good, you're on borrowed time. If you don't know your withdrawal rate, that's a problem.

2. Withdrawal Sequencing Strategy

Intentional ordering of withdrawals across account types to minimize lifetime taxes. The benchmark: withdrawal sequence is documented and followed. The conventional wisdom (taxable first, then tax-deferred, then Roth last) isn't always optimal. Sometimes filling low tax brackets with IRA distributions makes sense even when taxable money is available. If you're just taking money from wherever is convenient, you're probably paying more taxes than necessary.

3. RMD Planning and Execution

Required Minimum Distributions calculated accurately and satisfied on time with a tax-efficient strategy. The benchmark: RMD calculated for all applicable accounts, QCD (Qualified Charitable Distribution) strategy evaluated if charitably inclined, and RMDs taken by deadline. Miss an RMD and you'll pay a 25% penalty on the amount not distributed. If you're over 73 and don't have a documented RMD strategy, this is urgent.

Category B: Tax Optimization

These three points measure whether you're minimizing the tax drag on your retirement income.

4. IRMAA Management

Income managed to avoid or minimize Medicare Income-Related Monthly Adjustment Amount surcharges. The benchmark: MAGI tracked relative to current IRMAA thresholds, with income timing strategies employed to stay below thresholds when possible. IRMAA surcharges can add thousands of dollars annually to your Medicare premiums. If you don't know what IRMAA is, you're probably overpaying.

5. Social Security Taxation Optimization

Income managed to minimize the percentage of Social Security benefits subject to taxation. The benchmark: you understand provisional income calculation and employ strategies to keep provisional income below thresholds when possible. Up to 85% of your Social Security can be taxed depending on your other income. Withdrawing from a Roth instead of an IRA can dramatically reduce how much of your Social Security gets taxed.

6. Charitable Giving Optimization

Tax-efficient giving strategies employed including QCDs, bunching, donor-advised funds, and appreciated asset gifts. The benchmark: if charitably inclined and over 70.5, QCDs (Qualified Charitable Distributions) are utilized instead of taking RMDs and donating cash. QCDs satisfy your RMD while keeping the distribution out of your taxable income, a double win. If you're taking RMDs, paying tax on them, and then writing checks to charity, you're doing it wrong.

Category C: Protection

These three points measure whether you're protected against the specific risks that threaten retirees.

7. Medicare Coverage Optimization

Medicare Part D and supplement/Advantage coverage reviewed annually to ensure optimal fit. The benchmark: Part D plan reviewed annually using Medicare.gov Plan Finder, supplement versus Advantage evaluated, and coverage matches current prescription needs. Part D plans change their formularies every year. A plan that was great last year might not cover your new medication. If you haven't reviewed your Medicare coverage during open enrollment, you don't get this point.

8. Longevity Risk Protection

A strategy ensuring income continues regardless of how long retirement lasts. The benchmark: lifetime income sources (Social Security, pensions, annuities) cover essential expenses, or your portfolio is conservatively allocated for a 30+ year retirement. Half of 65-year-olds today will live past 85. Some will live past 95. If your plan runs out of money at 87, that's not a plan. It's a hope.

9. Fraud and Cognitive Decline Protection

Safeguards in place to protect against financial exploitation and manage finances if cognitive decline occurs. The benchmark: trusted contact designated on all financial accounts, durable power of attorney is current, and you've considered simplified investment strategy and account consolidation. Financial exploitation of seniors is epidemic. Cognitive decline happens gradually, and often the person affected is the last to know. If you haven't designated trusted contacts and updated your power of attorney, do it now.

Category D: Legacy

These three points measure whether your wealth transfer and end-of-life planning is in order.

10. Estate Plan Currency

Estate planning documents updated to reflect current wishes, tax laws, and SECURE Act beneficiary rules. The benchmark: will, trust(s), and powers of attorney reviewed within the past three years, with beneficiaries aligned with your estate plan. The SECURE Act changed everything about inherited IRAs. The stretch IRA is largely gone, replaced by a 10-year distribution requirement for most non-spouse beneficiaries. If your estate plan was created before 2020, it needs review.

11. Gifting Strategy Execution

Intentional annual gifting strategy to transfer wealth efficiently during your lifetime if desired. The benchmark: annual exclusion gifts utilized if wealth transfer is a goal, 529 superfunding evaluated for grandchildren, gifting strategy documented. Giving money to heirs while you're alive lets you see them benefit from it. It also reduces your estate. If you're leaving everything to heirs at death without considering lifetime gifting, you may be missing opportunities.

12. Liquidity and Cash Flow Management

Cash reserves and income timing sufficient to avoid forced portfolio sales during market downturns. The benchmark: 12-24 months of expenses in cash or short-term bonds, with monthly cash flow positive without relying on portfolio appreciation. Selling stocks in a down market to fund living expenses is the retirement equivalent of buying high and selling low. A proper cash buffer means you never have to sell at the worst time.

What Your Score Means

10-12 Points: Excellent. Your retirement is well-structured. Focus on maintaining what you've built and monitoring for changes in health, tax law, or markets.

7-9 Points: Good, with opportunities. You're managing most things well, but some optimizations or protections are missing. Address your gaps before they become problems.

4-6 Points: Fair, with significant gaps. Multiple areas need attention. A comprehensive review would help you understand what's missing and prioritize fixes.

0-3 Points: Critical. Major foundational elements are missing. These gaps could threaten your retirement security. Professional guidance is strongly recommended.

What to Do Next

This framework is how we evaluate every retiree client at Life Strategy Partners through our retiree planning process. We use it in our spring and fall reviews to ensure nothing falls through the cracks as tax laws change, health evolves, and markets fluctuate.

If you scored lower than you expected or if you want help optimizing your retirement income strategy we offer a complimentary consultation to discuss your situation.

We're a fee-only fiduciary firm in Tucson, Arizona, which means we don't sell products and we're legally required to act in your best interest.

You've worked decades to build this nest egg. Make sure it's working as hard for you as you worked for it.

Click Here to book a Quick Call. In 15 minutes, we'll see if we're the right fit for your situation.

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Life Strategy Partners

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This content is for educational purposes only and should not be considered personalized financial, tax, or legal advice. Your situation is unique. Consult with qualified professionals before making financial decisions. Life Strategy Partners is a registered investment advisor in Arizona.