Landing the Plane, Part 2: Timing Your Exit and Maximizing Your Final Working Year
We had been dreaming about the day for months.
Phoenix to London on British Airways, booked with AA miles we had been saving for several years. We are recovering optimizers, and every discretionary expense had been routed through our AA credit card for a year-plus with the goal of affording three one-way tickets in business class. We were happy to fly back cheaply in economy, but for the eight-plus hour overnight leg, we finally wanted to arrive at our destination fully rested.
As the trip approached, we wondered about the amenity kits, whether the seats were truly lie-flat, the quality of the bedding, and whether any of us would sleep. Spoiler alert: my son binge-watched movies and played video games all night, having the time of his life with the giant screen, ice cream sundaes, and all-you-can-drink soda.
We got to the airport hours early, because you do that when you buy a ticket at that price for some miles and a few fees. We settled into the lounge, played cards as a family at one of those round tables, and talked about what was waiting for us on the other side. Big Ben. The Tower of London with the Crown Jewels and ancient dungeons. A play in the West End. We dreamed of playing our own version of Scotland Yard, exploring the city by Tube, by bus, and by boat up and down the Thames.
When they called our boarding group and we walked toward the front of the plane, I genuinely could not believe the words applied to us. We rarely had good seats to the East Coast, much less another continent.
The first few hours were everything we had hoped for. Champagne upon boarding, salads and appetizers, a good scotch and bourbon collection for yours truly, a well-plated dinner, and a slow relaxation as work and weekly routines began to fade into the distance. Somewhere over Chicago we reclined our seats, put on the plush bedding, and dozed off. And then, what felt like a moment later, a flight attendant appeared at my shoulder to wake me with coffee and a warm smile, telling us breakfast was ready and that we'd be landing in about an hour.
I remember sitting up, resetting my watch, and feeling something shift. The trip that had been abstract for so long was now real. The next chapter was about to begin.
I've been thinking about that moment lately, seven and a half months out from my own landing date. Planning a downshift is a lot like that transatlantic flight. For years the destination is abstract. You're heads-down in the journey: accumulating, optimizing, running models late at night, listening to podcasts on the treadmill, showing up to the job you know may be coming to an end. And then one day you're awakened from your sleep and you realize the destination is no longer theoretical.
That's where I am. This post is about what the final approach looks like when you've done the homework: planning the timing, avoiding pitfalls, and landing safely.
If you haven't read Part 1 of this series, start there. The structural framework belongs before the landing.
Timing the Landing
A pilot doesn't decide the approach at 30,000 feet. Before the flight even takes off, a flight plan is designed, submitted, and approved. The descent is planned well in advance, adjusted for conditions, and timed with precision. Retiring or downshifting is exactly the same.
If, like me, you need to find a specific date and commit to it, here are a few practical guidelines for settling on the landing.
Choosing the year. Most personal finance followers know the 4% rule. There comes a point where you reach your basic needs and, if you're lucky, some or all of your wants. As you reach and go beyond those goals, you have to decide what year to retire. A contrarian way of thinking about it: assuming good health and mobility for most people lasts until their early-to-mid seventies, how many years do you want to give to your current working life and how many do you want to use for travel, sports, hobbies, and the things you may not be able to enjoy later? That question may help calibrate the right window more honestly than a spreadsheet will. It's not just about how you'll live but about how many years remain where you're healthy and can live well.
Choosing the month. Retirement and downshift planning is a team sport. Both partners need to be bought in and feel comfortable with the plan before you set a date. A good friend of mine, also in his fifties, had wanted to leave as early as this spring. After working through the plan together, his wife felt more comfortable if he worked through year-end. He's honoring that and I respect him for it. With that said, if you have flexibility, choose the season thoughtfully. In Arizona, retiring at the beginning of summer means being unpaid to sit indoors watching Netflix while it's 115 degrees outside. That's not the launch I wanted. I'm planning to leave in early 2027, during the spring window before the heat arrives. It also gives me a few weeks to decompress with Mrs. Desert FI before we celebrate our son's college graduation in May and he starts the next chapter of his own journey. The timing works on several levels simultaneously. You may live in Alaska or Upper Michigan where choosing your season carefully works in reverse. The point is to be thoughtful in timing your exit season.
Choosing the day. Know every payment date before you give notice. Bonuses that are discretionary often require active employment on the payment date. Equity compensation vests on specific dates. Commission income has settlement periods. A rule I've heard from people who've navigated this: if you must be present to win, don't give notice until the prize has been received and fully settled in your account. I've heard more than one story about meaningful money left on the table because someone gave notice three weeks too early, confident that a good relationship with a manager would carry the day. Sometimes it does. Often it doesn't.
One timing detail worth knowing: most corporate benefit plans cover you through the end of the month in which employment ends. A last day of May 1st gives you May coverage at no additional cost. A last day of April 30th does not. Small thing, but worth building into your timing when you have the flexibility.
A note on Rule 55 and 72t. This is the right moment to think about 401K access if you're in your early to mid-fifties. Rule 55 allows penalty-free withdrawals from an employer's 401K for employees who separate in or after the year they turn 55. If you're contemplating retiring at 54, waiting a few additional months to cross that threshold could meaningfully change your options before 59.5. I'm leaving before 55, so Rule 55 isn't available to me. For readers who want to retire well before age 55, Section 72t allows substantially equal periodic payments from retirement funds like a 401K or 403B without the 10% early withdrawal penalty. However, once you begin, the schedule is largely irrevocable for the longer of five years or until you reach 59.5. Understand that inflexibility fully before committing, but it is a viable option if you need it.
Avoiding the One More Year Tractor Beam
Even as you plan down to the year, month, and day, there will be an inevitable gravitational pull of what the FI community often calls One More Year Syndrome. Here is what it looks like from inside it.
This week I delivered a business result that earned a guaranteed payment I'll receive later this year. An equal payment is due at year-end next year. I won't be there to collect it. And there may be other results with a similar payment schedule. The pull is always there. The golden handcuffs in my situation are well-crafted. There's always a bonus I'd be forfeiting, another few months of salary, a second tranche of an incentive that pays in year two if I just stay. Optimizers always want to find new things to optimize. At some point that energy has to be redirected into things of greater meaning: purposeful work, improved health, reduced stress, and more time with the people who matter most.
The plan is strong and getting stronger. It was good a year ago. It's even more resilient now. And if I wait for perfect, I'll die while still working. I once worked alongside a colleague named "Lawrence" who died of cancer I believe was brought on by years of round-the-clock calls and relentless stress. I think about my father-in-law who died in his early sixties. We don't know how long we have. The question stopped being whether I could afford to leave and became whether I could afford to stay, in the only currency that actually matters: time. I've written about Lawrence in The Gilded Cage and my father-in-law in I'm Not Leaving Yet, if you want the full story. Both of their passings have had a profound impact on my thoughts about timing your exit.
One caution: the syndrome has a way of disguising itself as wisdom. Let me show you what that disguised wisdom feels like. A college friend and I once attended a noon kickoff football game at our alma mater, loaded up the car, and drove twelve hours to Killington, Vermont to ski fresh powder on a Sunday, driving back through the night to arrive in time for Monday classes. The powder was epic and the conversation was good. But what I remember most is the drive home. I took the first shift, Mountain Dew on the console, mind running hard for hours through the darkness. We switched at some point and Matt took the wheel. I closed my eyes. And the road kept coming toward me anyway. My mind had been running so hard for so long that it couldn't stop even when I gave it permission to.
That is what OMYS feels like from the inside. It is not laziness or fear. It often masquerades as prudence. There is always one more bonus worth waiting for, one more tranche that vests next quarter, one more vacancy on the team where leaving now would feel like abandoning people you care about, one more reason why this particular moment is not quite the right moment. The optimizer brain cannot stop optimizing even when you have given it permission to rest. This is where faith comes in. Faith that what you're yearning for is worth the risk. Faith that the planning you've done was diligent enough. Faith that the surprises ahead won't be more than you can handle. And for me personally, faith in the One who holds the future in His hands.
Benefits in Transition
If you're a planner, you've probably already done some light research on the Affordable Care Act Marketplace. But benefits in transition is broader than just health insurance, and there are some things here that surprised me when I dug in.
Three primary options for post-exit medical coverage:
Option one is COBRA, which continues your existing employer coverage at 102% of the full group premium. For a family it's often $1,500 to $2,000 per month or more. The advantage is seamless continuation with the same network and deductibles for up to 18 months from employment separation. The cost can be comparable to or even less than ACA options depending on your situation, so it's worth a real comparison before assuming it's too expensive.
Option two is the ACA Marketplace. Losing employer coverage is a qualifying life event that opens a 60-day Special Enrollment Period from the date your coverage ends. The clock starts from when coverage ends, not when employment ends. ACA plans can be significantly cheaper than COBRA in some situations, and there are subsidy opportunities we'll cover in a moment.
Option three is a health-sharing ministry or alternative arrangement. Medishare is one of the better-known options, but there are multiple, both faith-based and not. These are not traditional insurance and come with meaningful differences in how claims are handled and what's covered. Pre-existing conditions are not required to be covered as they are under ACA plans. Worth researching if the premium savings matter to your plan, but go in with clear eyes.
Beyond these three, it's worth exploring alternatives that can lower the total cost of care beyond insurance. One I'm actively considering is joining a Direct Primary Care group. Several in my area charge $100 to $200 per month per member for high-quality care with unlimited office visits and no co-pays. While this doesn't cover specialists, hospitalization, labs, or medicines, it can make a higher-deductible plan more viable. I've heard of a financial podcaster who joined a cattlemen's trade association to access group health coverage. And for those open to working part-time specifically for benefits, Barista FI, working at Starbucks, Costco, or other retailers that offer part-time health coverage, remains a path many have taken. It's not my plan but worth knowing it exists.
Some other areas to consider:
COBRA dental and vision. You can typically continue dental and vision through COBRA while moving to an ACA plan for medical, as long as the plans are administered separately. Post-COBRA I plan to research cash prices with my dentist and possibly use an annual dental plan rather than traditional insurance. What we call dental insurance often functions closer to a prepaid plan with annual caps, and the cash price comparison is worth doing. My personal plan is to omit dental insurance next year but to sign up for vision insurance. It's very affordable in my employer plan, and the three of us can all get eye exams in January, get an extra set of frames or lenses, and take full advantage of the benefit despite not planning to retain it post-departure.
HSA strategy. If you're enrolled in an HSA-eligible High Deductible Health Plan, you can keep contributing in retirement as long as you maintain HDHP coverage. Unlike a 401K or IRA, the HSA doesn't require earned income to contribute. For those who may not have had an HDHP previously: the HSA is triple tax-advantaged. Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. In our accumulation years we've treated it as a second Roth, paying medical expenses out of pocket as much as we could afford and letting the balance grow. We plan to do the same in our fifties, preserving the balance for later years when we may need it more. For readers who change health plans mid-year, prorate your HSA contribution for the months you're enrolled in an HDHP rather than relying on the last-month rule unless you're confident you'll maintain HDHP coverage through the required testing period.
A warning about HR. In our working years we may encounter genuinely helpful people in HR. In the exit process, their role is to protect the company. I'd strongly discourage asking HR questions about maxing out benefits before you leave or requesting COBRA cost information before you've given notice. Most questions can be answered by your 401K plan administrator directly, or by finding your company's benefits documents on the intranet or a public-facing portal. If you have friends or colleagues who've retired or left your employer, they can be a surprisingly valuable source of practical intelligence about what to expect. I have several and the conversations have been invaluable given their unique knowledge of my specific environment.
A note on medical tourism. I'll be honest that I'm not fully comfortable with this concept personally, though I have a good friend who had extensive dental work done on a trip to Thailand and was genuinely satisfied with both the quality and the price. If you're planning extended international travel in your first retirement year, routine care in countries like Portugal, Spain, or Thailand can cost a fraction of US pricing. Worth factoring in if you're heading that direction anyway.
Maximizing Tax-Advantaged Contributions
Your final working year will likely be a higher tax bracket year than the ones that are coming. That makes it a great year to maximize contributions to tax-advantaged accounts if you can afford to do so.
Max your 401K before you leave. Every dollar reduces your taxable income in the year it's contributed. If you're leaving mid-year, this not only gives your retirement account a boost but also helps you avoid taxes in a higher bracket year. Each plan has different maximum contribution percentages, worth researching and factoring into your holistic financial plan.
Max your HSA for the same reason. Contributions are tax-deductible going in, growth is tax-free, and withdrawals for qualified medical expenses are tax-free on the way out. In 2026 the family contribution limit is $8,750, plus a $1,000 catch-up if you're 55 or older. In a high-income year this deduction is worth more than it will be in any subsequent lower-income year.
Consider a Donor Advised Fund for charitable giving. If you give regularly, your final working year is the ideal time to front-load two or more years of giving into a single DAF contribution. You receive the full deduction in the high-income year and distribute to charities over time on your own schedule. Give appreciated securities rather than cash: you avoid capital gains on the appreciation and receive the full fair market value as a deduction. It's one of the most tax-efficient giving strategies available and genuinely underused by people who could benefit from it significantly.
Consider Roth conversions in your first retirement years. The years between leaving full-time work and claiming Social Security are likely the lowest-income years of your adult life. If you've spent a career in a high bracket, this window is one of the most valuable tax planning opportunities you'll ever have. I have more in traditional accounts than I wish I did. My plan is to convert meaningfully each year, filling lower brackets with intention, well before Required Minimum Distributions potentially push me into higher brackets in my mid-seventies. By paying some taxes now at lower rates, I'm avoiding a larger forced tax bill later. The horizon shaping my timeline is age 63: Medicare premiums are based on income from two years prior, so income at 63 affects Medicare costs at 65. That two-year lookback is my conversion deadline. I want to complete the bulk of this work before it creates pressure.
The pro rata rule matters here and is worth understanding before you start converting. For a full explanation, see the Geek Out Corner at the bottom of this post. The short version: as long as your retirement assets are in a 401K, 403B, or Solo 401K rather than a traditional IRA, you're in good shape. A large traditional IRA balance is what creates the complication.
If planning a Next Endeavor, consider your 401K options after you leave. You have three paths: leave the balance at your former employer if fees are low and investment choices are strong; roll it to a traditional IRA for broader investment flexibility; or, if you're starting a Next Endeavor with self-employment income, establish a Solo 401K. I'm most familiar with Fidelity, which offers one with no account fees, strong low-cost fund options, and Roth employee deferrals now available as of 2026. As both employer and employee you can shelter meaningful income, and the Solo 401K can accept incoming IRA rollovers, which keeps your Roth conversion situation clean. You need self-employment income to contribute but not profitability to establish the account. As long as profit motive exists for the business, you can open it before your first profitable year.
Plan for estimated tax payments in your first full retirement year. In your final working year, employer withholding generally covers your tax liability. In your first full year without a W-2, that withholding is gone. If you have Next Endeavor income, Roth conversion income, or meaningful investment income, you'll need to make quarterly estimated tax payments to avoid penalties. The schedule is April, June, September, and January. Plan this with your CPA if you have one before your first payment is due.
Reducing Health Insurance Costs Through ACA Subsidies
While multiple coverage options exist, the ACA Marketplace is where most pre-Medicare retirees end up. Understanding how the subsidy rules work is one of the highest-impact things you can learn before you leave, so it's worth a slightly deeper look than the other options.
ACA premium tax credits reduce your monthly insurance cost based on Modified Adjusted Gross Income relative to the Federal Poverty Level. The credits can be meaningful, potentially thousands of dollars per year for a family. The tension: every dollar you convert from traditional to Roth adds to your MAGI for that year, which affects your subsidy eligibility.
My CFP's advice for my situation was that the long-term tax savings from converting now at lower rates outweigh the near-term loss of subsidy eligibility. Required Minimum Distributions may push us into higher tax brackets at age 75 and beyond. By paying some taxes now, I'm avoiding a larger forced bill later. But that conclusion is specific to my portfolio, tax projections, and timeline. It won't be the right answer for everyone.
One note of reassurance: if your headspace is elsewhere when you leave, you can elect COBRA temporarily and do a deeper dive on Marketplace options once you have actual income numbers for the year. You're not locked into a permanent decision on your first day of freedom.
Mentally Framing the Stub Year
Unless you're leaving in December or very close to it, you're going to face a partial year where your financial life is part working finances and part retirement or downshift.
Frankly, my instinct was to treat the partial year 2027, the months between my exit and December 31, as a transition season. Save extra from salary and additional comp to cover the rest of the year at my current working years' burn rate. Keep full-time spending habits in place, maybe take a big trip, decompress before the new financial reality fully sets in.
After reflecting on what this next phase actually means, I decided against it.
I'm planning to step directly into retirement spending parameters the month I leave. Not as deprivation but as calibration. The question isn't whether I can afford to spend at the full-time income level for a few more months, but whether I want to spend those months learning a new financial rhythm or deferring that learning until later. The sooner I'm living the life we've planned for, the sooner I'll know if those parameters feel right. If I've misestimated something, I want to find out in year one when I have the most flexibility to adjust rather than kicking the can to year two.
It also means the Life Fund will provide those life-enhancing opportunities where we actually want them. Speaking of which...
The Life Fund in Action
I introduced the Life Fund in The Sequence That Determines Whether Your Retirement Lasts as an optional fourth bucket: reserves sitting outside the drawdown structure entirely, earmarked for irregular large expenses that don't fit neatly into annual spending plans. Part of the Life Fund is defense: funds available to replace a roof or cover a catastrophe. But the more exciting part is offense in trying to build a great life.
For three decades, our family's travel calendar has been set by a school schedule. Summers meant one window. Spring break meant another. Travel flexibility was a luxury we wanted but could never fully access.
That changes very soon.
Some of what I'm thinking about is small. We've been researching kayaks. A pair of solid recreational kayaks with paddles, gear, and a roof rack runs somewhere in the neighborhood of $2,000 to $2,500, the kind of purchase that could easily run a twelve-month sinking fund at $200 a month. Or it could come from the Life Fund the week I downshift, which also means inviting recently retired friends to join us midweek on lakes I've been wanting to paddle for years. I want to see and photograph wild horses along the shoreline, glowing canyon walls, mornings on cool deep water with birds I'll need to learn to identify. It also means more time with the love of my life and a new social outlet built around nature rather than conference rooms. That's what Life Fund flexibility actually feels like in practice and it is invigorating.
On the bigger expense side, I've been eyeing a Starlux Airlines direct flight from Phoenix to Taipei since it launched in January. Whether that's to enjoy Taiwanese food and explore Taipei or to tack on a week in Japan or Singapore, it sounds like an adventure worth taking. Similarly, New Zealand has been pulling at us for several years: two islands of genuinely remote beauty, dramatic enough to double as another world entirely, best experienced slowly from behind a steering wheel with no particular schedule to keep. As Lord of the Rings fans, seeing the actual Hobbiton and the locations where the movies were filmed fits our interests well. The fare monitors are running for both routes. If the timing is right and an attractive deal appears, the funds are there without touching the drawdown plan.
Having some flexibility in the early years, beyond the reasonable travel budget in the annual plan, for a trip or two while we're still strong, energetic, and mobile feels like some of the highest-return money in the portfolio. The ROI on an experience you couldn't have done at any other season of life is impossible to calculate and genuinely irreplaceable.
After the Plane Has Landed
In the opening story, I shared the anticipation, the planning, and the pure joy of getting to London. But after the plane landed, we collected our bags, walked through customs, and stepped onto UK soil, and the adventure was just beginning.
I thought about playing cards in the lounge at Sky Harbor a week later as we drove out to a castle in the Irish countryside, ready for high tea, waterfalls, and other adventures down small county lanes with lush green landscape all around. Nothing urgent waiting for any of us. That's what all the planning is for: the permission to be fully present somewhere extraordinary with the people you love, with no work flight to catch and no meeting to prepare for.
There's something humbling about all of this planning. I can research the destination, book the ticket, pack the bag, and settle into the seat. But I'm not flying the plane. The One who holds the future, who promises a hope and a plan I can't fully see from my window seat, makes the adjustments I can't anticipate: the wind, the weather, the unexpected turbulence and the tailwinds I didn't earn. My job is to plan thoughtfully, act wisely, and then trust. That's the posture I'm trying to carry into this transition.
Landing the plane is how you get there. But the destination is where the real story begins. I wrote about the rest of that trip if you'd like to read more about it.
Whether you're still several years from your own landing, coming in for final approach, or already on the other side, a couple of questions to sit with:
Where are you on this journey? Still stacking retirement miles, trying to pick a date, or already in the descent making sure you're prepared for a smooth landing?
What's one practical step you could take this week? If you're a few years out, maybe it's researching ACA costs in your area to make sure your spending estimate is accurate. If you're closer to the runway, maybe it's reviewing your employer's policies about what happens when you leave. Whatever it is, a practical step or two will help alleviate anxiety and make sure you're well prepared for what's ahead.
Drop your thoughts in the comments below or send me an email. I read every one.
To building a great life and enjoying both the journey and the destination.
🌵 Desert FI
Want to go deeper?
The Sequence That Determines Whether Your Retirement Lasts: the math behind sequence of returns risk and the three protections that let you sleep through the chaos
The Gilded Cage: what it feels like when the math says you're free but it’s hard to turn off the engine that drives you
Why $20K a Year Changes the Retirement Math More Than You Think: how a modest Next Endeavor income changes the drawdown math during the most vulnerable decade
Not yet on the trail? Weekend Reflections goes out every Sunday morning: a personal letter on money, meaning, and the courage to build a life that finally feels like your own. Join us at DesertFI.org/join or using the form below.
Geek Out Corner
If you've been contributing to a backdoor Roth, you already understand the pro rata rule implicitly. For those who've contributed directly to Roth accounts and haven't needed to worry about it, here's how it works.
When you convert pre-tax traditional IRA money to Roth, the IRS treats all your traditional IRA money as a single pool. If you have $90,000 in pre-tax IRA money and $10,000 in after-tax contributions, only 10% of any conversion is tax-free. The remaining 90% is ordinary income, regardless of which dollars you think you're converting.
The fix is straightforward in concept: have no pre-tax money sitting in traditional IRAs at conversion time. Before you leave your employer, check whether your 401K plan accepts incoming rollovers of pre-tax IRA money. Many do. Rolling pre-tax IRA money into your 401K before exit, or into a Solo 401K after, clears the traditional IRA and sets you up for cleaner backdoor Roth contributions and conversions going forward. Work through the mechanics with your CPA before executing any rollovers, as the order of operations matters.
Everything in this post reflects my own planning process. Although I ran my own excel-based analysis, before finalizing our strategy, my wife and I worked with a fee-only CFP and I consulted a CPA on the tax questions. Please work with qualified professionals before making decisions about your own strategy. Your situation, tax circumstances, risk tolerance, and timeline will be different from mine.
