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Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees. I am a CPA and financial advisor, not an attorney, and this article is educational and not legal advice. Documents like powers of attorney should be drafted or reviewed by a licensed estate planning attorney.
A phone call about her father Wendy calls me on a Tuesday morning, and I can tell right away this one is different. She's 54, a county employee, PERS Plan 2, planning to retire at 59. Usually we talk about her pension timing and her DCP balance. Today she wants to talk about her dad. He had a small stroke over the weekend. He's going to be okay. But the bills keep coming, and when she called his bank to help, they wouldn't talk to her. She's his only daughter. She has a key to his house. None of that mattered to the bank. "I thought being family was enough," she says. It almost never is. Love and trust are not the same as legal authority Here's the part that surprises people. You can be the most trusted person in someone's life and still have no legal right to manage their money. The tool that fixes this is a durable power of attorney for finances. It lets someone you choose (your agent) step in and handle bills and accounts while you're alive.1 "Durable" is the important part. A regular power of attorney generally stops working the moment you become incapacitated, which is often the exact moment help is needed. A durable one keeps working through it.2 Some of these documents take effect the day they're signed. Others "spring" into effect only after a doctor certifies incapacity.2 Springing sounds safer. In practice, getting that certification during early memory loss can be slow and frustrating, right when a family is already stretched thin. Wendy's father, it turned out, had signed a durable power of attorney years ago. We just had to find it and get it to the bank. What happens when the document doesn't exist Plenty of families never get there. One national study found that only about 41 percent of parents expect their children to hold financial power of attorney for them.3 A common reason is simple: spouses name each other and never name a backup. When there's no valid power of attorney and someone loses the capacity to sign one, the path forward usually runs through the courts. In Washington, that means a conservatorship under Chapter 11.130 RCW, where a judge decides who can manage the person's finances.4 It works, but it's a different experience. It becomes public record. It can take months. And the conservator often has to file an annual accounting with the court for as long as it lasts.4 A power of attorney signed ahead of time avoids most of that. The only thing that decides which path a family takes is whether the document got signed while it still could be. Then Wendy asked the better question We sorted out her dad. Then she got quiet for a second and asked the question I was hoping she'd ask. "Wait. If something happened to me, could Mark even touch my accounts?" Mark is her husband. And this is where it gets specific for public employees. Your DRS accounts don't work like a joint checking account. For your agent to act on your pension or DCP, DRS requires two things: a valid power of attorney and a notarized Affidavit of Attorney in Fact. The power of attorney also has to meet Washington's requirements under Chapter 11.125 RCW.1 Being married doesn't override that. Without the right documents on file, even a spouse can hit a wall. The powers people forget to include There's one more layer, and it's easy to miss. Washington law treats certain powers as "hot powers." Things like making gifts or changing a beneficiary designation only work if the document specifically grants them. A general power of attorney doesn't cover them automatically.5 Why does that matter for you? Because so much of your retirement passes by beneficiary designation, not by your will. Your DRS benefits go to the people you name, and if you name someone other than your spouse, state law may still require DRS to pay your spouse.6 If nobody can legally coordinate those designations when you're unable to, a small oversight can become a permanent one. A few measured steps None of this needs to happen this week. But here's where I'd point Wendy, and where I'd point you. Find out what you already have. Pull the actual documents. Are they durable? Immediate or springing? Nobody remembers until they read the fine print. If you have an immediately effective power of attorney, consider getting it to your institutions now, including DRS, so you learn about any problems while they're still fixable. Look at your beneficiary designations on your pension, your DCP, and any IRAs, and make sure they still match your life today. If you're the agent for a parent, keep clean records and sign as the agent, not as yourself. The format is their name, by your name, as attorney-in-fact.7 And when it's time to actually draft or update these documents, work with an estate planning attorney. I'm a CPA and financial advisor, not a lawyer, and this is one place where the right document, drafted correctly, is worth it. The real point None of this is really about paperwork. It comes down to whether the person you'd want helping you, or helping your parents, is actually able to when the time comes. Wendy got off that call with a short list and a lot less worry. That's how most of these end once someone can see the whole picture. Sources 1. Washington State Department of Retirement Systems. "Power of Attorney.." https://www.drs.wa.gov/sitemap/poa/ 2. American Bar Association. "Power of Attorney.." https://www.americanbar.org/groups/real_property_trust_estate/resources/estate-planning/power-of-attorney/ 3. Fidelity Investments. "2025 Family and Finance Study.." https://institutional.fidelity.com/app/literature/view?itemCode=9922495&renditionType=PDF 4. Washington State Legislature. "Chapter 11.130 RCW: Uniform Guardianship, Conservatorship, and Other Protective Arrangements Act.." https://app.leg.wa.gov/RCW/default.aspx?cite=11.130 5. Washington State Legislature. "RCW 11.125.240: Authority that requires specific grant.." https://app.leg.wa.gov/RCW/default.aspx?cite=11.125.240 6. Washington State Department of Retirement Systems. "Beneficiary information.." May 23, 2024. https://www.drs.wa.gov/beneficiary/ 7. American College of Trust and Estate Counsel Foundation. "Guide for Agents Acting Under Durable Financial Powers of Attorney.." https://www.actec.org/wp-content/uploads/2023/08/Guide_for_Agents_Acting_Under_Durable_Financial_Powers_of_Attorney.pdf
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Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees.
The moment the numbers finally work There is a moment on a planning call I have learned to watch for. We have gone through the DRS pension estimate. We have modeled the DCP withdrawals, the healthcare bridge to Medicare, the Social Security timing. The plan holds. I have been sharing my screen for twenty minutes, walking through the projection, and I say some version of, “You can do this.” And what comes back is not relief. It is a long pause. Not every time. But often enough that I have stopped being surprised. Take Curt. He is 51, a fire captain with 27 years of service credit in LEOFF 2. His savings are solid. His plan works. He is quiet for a few seconds. Then he says, “Okay. But what would I actually do?” That question is the one most retirement plans never answer. The fear is not about the money Teresa Amabile, a Harvard Business School professor emerita, spent a decade studying how people move through retirement, drawing on more than 200 interviews with 120 professionals1. Her finding is one I keep coming back to. When healthy, financially secure, accomplished people hear the word retirement, what surfaces is fear, uncertainty, and a sense of losing who they are2. Money is rarely the source of it. So Curt’s pause makes sense. He is not scared of running out. He is scared of Tuesday. Retiring is four tasks, not one date Amabile’s research frames retiring as four pieces of work rather than a single event: deciding when and how to go, detaching from work practically and psychologically, building a first draft of a new life structure, and eventually settling into one that holds1. Washington State public employees carry something extra through all four of those. Twenty-seven years in one department does something to a person. The shift schedule that has organized your family’s life since your kids were small. The crew. The role you play at three in the morning when nobody else can. You do not just turn in gear. You turn in a version of yourself. Where the DRS calendar helps, and where it lies Here is what I find useful about the DRS system. It gives you a date. Under LEOFF 2, full retirement comes at age 53 with at least five years of service credit. You can go as early as 50 with 20 years, but the benefit is reduced by up to 3% for each year before 533. That is a smaller haircut than most plans impose. PERS 2, TRS 2, and SERS 2 members generally wait until 55 with 20 years, with steeper reductions before 654. For Curt, that means he is already eligible. Right now. Two years from a full benefit, and eligible today at a reduction he can afford. The date feels like an answer. It is not. It is a window opening. Eligibility tells you when the pension math permits you to leave. It says nothing about whether you have anything to leave toward. I have watched people treat those as the same thing, and it usually surfaces about eight months in. What actually helps, before the last shift Separate the decision from the date. I ask clients to name their earliest eligible date, then deliberately set it aside for a session. If you would still want out on that date after the pension question is fully settled, that tells you something. If you would not, that tells you something too. Detach in pieces. Amabile’s research found the psychological detachment from a long career is the hard part, and it rarely happens cleanly on a final Friday1. Curt starts teaching a fire science course at the community college two years before he plans to go. It is not a side gig. It is a rehearsal. Expect the first version to be wrong. The third task is building a provisional life structure, and provisional is the operative word1. People try something, find it does not fit, and rebuild. That is the process working. Fund the life you describe, not a generic one. Once Curt tells me he wants to teach part time and take two long steelhead trips a year, the plan changes shape. The teaching income shifts his Roth conversion window. The travel front-loads spending in exactly the years he is paying his own health premiums. Those years have hard deadlines attached. PEBB must receive your retiree enrollment form no later than 60 days after your employer-paid or COBRA coverage ends, and you have to be vested and eligible to retire under a Washington State plan when that coverage ends5. Miss the window and you can lose the option. The money follows the life. Not the other way around. The question I ask It is not “what are your goals for retirement.” Nobody can answer that. I ask people to describe a Tuesday. Not the first week, when everything still feels like vacation. A Tuesday in October of your second year. What time do you get up? Who do you talk to? What is on the calendar that you would be disappointed to miss? Most people cannot answer at first. Curt got about as far as coffee. That is fine. It is a diagnostic, not a test. The blankness after coffee is the work that is left, and it is far better to find it two years out than two months in. Where to start Pull your DRS benefit estimate and find your earliest eligible date. Write it down. Then stop looking at it. Instead, try describing that Tuesday out loud to your spouse. Notice where you run out of things to say. Bring that gap into your next planning conversation. It belongs there as much as the pension option election does. The plan I build for Curt is not really a withdrawal strategy. It is a funding mechanism for an answer he has not finished writing. That is the part worth getting right. Sources 1. Harvard Business School. “Retiring: Creating a Life That Works for You.” Amabile, Teresa M., Lotte Bailyn, Marcy Crary, Douglas T. Hall, and Kathy E. Kram. https://www.hbs.edu/faculty/Pages/item.aspx?num=66672 2. Amabile, Teresa M. “The Surprising Realities of Retirement.” Thought Sparks. April 2026. https://thoughtsparks.substack.com/p/the-surprising-realities-of-retirement 3. Washington State Department of Retirement Systems. “LEOFF Plan 2.” https://www.drs.wa.gov/plan/leoff2/ 4. Washington State Department of Retirement Systems. “Twenty years might be your retirement milestone moment.” August 2025. https://www.drs.wa.gov/twenty-year-milestone-moment-newsfeed/ 5. Washington State Health Care Authority. “Retiree eligibility.” https://www.hca.wa.gov/employee-retiree-benefits/retirees/retiree-eligibility Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees. A quiet moment on a Tuesday call Marcus went quiet during a meeting recently. He is 55, a facilities manager for the county, and he has 28 years in PERS 2. He and his wife have done everything right. They maxed the DCP for years. They saved outside of it too. On my screen, the plan looked healthy. More than healthy. So I told him the truth. His plan could support a good deal more spending than he was doing now. That is when he got quiet. Then he said, “But what if something happens?” I have heard some version of that sentence more times than I can count. And it almost always comes from the people who are in the best shape to retire. The savers have the hardest time Here is the part that surprised me when I first started paying attention to it. The clients who struggle most with spending are usually the ones who saved the best. Decades of the same habit. Save, and then save a little more. That habit does not switch off the day you retire. The numbers here are almost hard to believe. Following the well-known 4% rule, retirees finish with more than double their starting wealth in about two-thirds of historical scenarios, and they are more likely to end up with five times what they started with than to end up with less1. Most diligent savers never come close to running out. They are far more likely to reach the end with plenty left over and a long list of things they never let themselves do. Why this hits Washington public employees harder If you are in PERS, SERS, TRS, LEOFF, or PSERS, you have something most private-sector savers do not. A pension. Your Plan 2 or Plan 3 pension pays a guaranteed monthly benefit for the rest of your life2. That is a paycheck that shows up whether the market is up or down. And that quietly changes the math. Research from the Employee Benefit Research Institute found that retirees with pension income held onto their assets far more tightly than those without one. Pensioners' assets fell only about 4 percent over 18 years, compared with 34 percent for everyone else3. So the pension that gives you security can also make you too careful. Your bills are already covered by the pension and Social Security. Your savings just sit there. And for a lot of public employees, that money never gets used for the life it was meant for. Why “enough” keeps moving Brian Portnoy, a behavioral finance writer, draws a distinction I come back to often. Being rich is the pursuit of more. Ask someone with a million dollars what “enough” looks like, and they will usually say two. Get to two, and the number becomes five. The finish line keeps moving. Wealthy is different. It means having enough to fund a life that actually matters to you. The kind of life you would design for yourself if no one else were watching. For most of the public employees I work with, that life is not extravagant. It is more time with the grandkids, or the cabin near the water they have been talking about for years. Often the things that matter most cost the least. The same fear shows up in your portfolio That instinct to protect what you have does not stop at spending. It shows up in how people invest, too. A properly diversified portfolio always has something lagging at any given moment, and the temptation is to react to whatever is down. Portnoy put it memorably once: diversification means always having to say you're sorry4. Learning to sit with that discomfort, instead of bailing on a sound plan because one piece is underperforming, is the same muscle that lets you spend with confidence later. What actually helps I don't have a trick that flips the switch. But a few things move people from scared to spend toward comfortable. Name it out loud. Knowing that great savers commonly feel this way takes some of the shame out of it. It is normal. In a way it is just what happens after doing the hard thing well for 30 years. Run the numbers with someone. There is real clarity in seeing your pension, your Social Security, and your savings laid out together as one paycheck. Most of the fear lives in the gap between what people assume and what the plan actually shows. Write down what your version of “enough” looks like. Not dollar figures. The experiences. Once it is on paper, it stops being a vague someday and becomes a plan. Then practice. This is the one that stays with me. You don't have to wait for the retirement date to start living a little. If you plan to retire at 58, start leaning into that life at 55. Where to start There is no 30-day plan here and no urgency. This is a slow shift, and it should be. Pull your most recent pension estimate from your DRS online account so you know your real number. List the two or three things you would actually want to spend on if you gave yourself permission. And if a specific “what if” is what holds you back, bring that worry to a planning conversation and stress test the plan against it. See what actually happens. Marcus is still working through it. But on our last call, he mentioned he and his wife finally booked the trip they had been postponing for six years. That is the whole point. Sources 1. Kitces, Michael. “The Consumption Gap In Retirement: Why Most Retirees Will Never Spend Down Their Portfolio.” Nerd's Eye View, Kitces.com. https://www.kitces.com/blog/consumption-gap-in-retirement-why-most-retirees-will-never-spend-down-their-portfolio/ 2. Washington State Department of Retirement Systems. “Choosing Plan 2 or Plan 3.” https://www.drs.wa.gov/choice/ 3. Employee Benefit Research Institute. “Asset Decumulation or Asset Preservation? What Guides Retirement Spending?” April 3, 2018. https://www.ebri.org/content/asset-decumulation-or-asset-preservation-what-guides-retirement-spending 4. Portnoy, Brian. “Diversification Means Always Having To Say You're Sorry.” Forbes, March 9, 2015. https://www.forbes.com/sites/brianportnoy/2015/03/09/diversification-means-always-having-to-say-youre-sorry/ -Seth DealNote: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees. The moment right before someone pulls the trigger By the time a client is ready to retire, most of the hard work is already done. The pension option is chosen. The savings are in place. We have mapped out the income, the taxes, the healthcare bridge to Medicare. And then, right before retirement, the same thing happens almost every time. They pause. Then comes the question, usually some version of the same one. What if I do this, and the market drops the week after? Take Cheryl. She is a hypothetical county employee in her late 50s with about 30 years in PERS 2. She has done everything right. Saved steadily. Lived within her means. She is not scared of running out of money someday. She is scared of starting at the wrong moment. What the history actually says about timing So let me tell you what the research shows. Peter Lynch, who ran Fidelity's Magellan fund for years, once looked at what would happen to an investor with almost comically bad luck. Imagine you invested money every year for 30 years, from 1965 to 1995, but you always bought on the single worst day of the year. The very top, every time. You would have earned about 10.6 percent a year.1 Now imagine the opposite. Perfect timing, buying at the lowest point every single year. Your return would have been about 11.7 percent a year. Thirty years of the worst luck imaginable trailed thirty years of flawless timing by roughly one percentage point. The thing people lose the most sleep over turned out to matter far less than simply staying in the market. Why retirement changes the math Here is where I have to be honest, though. That study is about someone still working and adding money for decades. Time was on their side. When you are retired and pulling income out, you do not have 15 years to wait for a bad market to recover. The order your returns show up in starts to matter. A steep drop in your first few years, while you are selling to pay bills, can do lasting damage. So the goal is not to time the market perfectly. Nobody can. The goal is to never be forced to sell at the bottom. And that is exactly where being a Washington public employee gives you an advantage most people never have. What your pension really does Cheryl's PERS 2 pension pays her a guaranteed monthly benefit for the rest of her life. It is not tied to how the stock market performs.2 Read that again, because it is the whole point. Her paycheck in retirement does not care what the market did last week. It shows up the same in a boom and in a crash. When your core bills, the mortgage, the groceries, the utilities, are covered by a check that arrives no matter what, a falling market becomes something you can watch and wait out instead of react to. You are not a forced seller. That is a very different position than a private-sector saver whose entire retirement income depends on their portfolio. When the market drops 30 percent, they may have to sell investments at a loss just to cover the month. You do not have to sell anything. The war chest that fills the gap Of course, the pension rarely covers every dollar, especially in the early years before Social Security starts. That gap is what actually worries people. And it is fixable. For the money Cheryl will spend over the next several years, we do not leave it exposed to stocks. We hold it in what I call a war chest, roughly five years of planned withdrawals kept in high-quality, short-term bonds. When stocks fall, she spends from the war chest and leaves her stock investments alone to recover. When markets settle, we refill the bucket. There is a quiet bonus here too. Holding both stocks and bonds means that when stocks drop, we can rebalance, trimming the bonds that held up and buying stocks while they are cheap. It feels backward in the moment. It is one of the most powerful things a disciplined investor can do. The pension is the floor. The war chest is the buffer. Together they are why Cheryl can leave her stocks alone long enough for time to do its work. A few measured next steps So the fear that keeps people up at night, the fear of one bad day, is mostly the wrong thing to worry about. The better question is not “what if I pick the wrong moment?” It is “what am I forced to sell when the market drops?” For a Washington public employee who plans ahead, the honest answer can be nothing. If you are somewhere near where Cheryl is, start here. Map your expenses into two buckets: what your pension will cover, and what your portfolio needs to handle. Then make sure the money you will spend in the next several years is not sitting in the stock market. And remember this is one piece of a larger plan. When you claim Social Security, how you sequence withdrawals, and how you handle taxes all work alongside the pension. But it starts with knowing your floor. Get that right, and the next market drop becomes something you read about, not something you fear. Sources 1. PBS Frontline. "Betting on the Market: Interview with Peter Lynch." https://www.pbs.org/wgbh/pages/frontline/shows/betting/pros/lynch.html 2. Washington State Department of Retirement Systems. "Choosing Plan 2 or Plan 3." https://www.drs.wa.gov/choice/ -Seth DealNote: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees.
The client who kept saying “one more year” Ron showed up to our call last fall with a spreadsheet he’d clearly been staring at for months. He’s 57. Public works supervisor for his county, nearly 30 years in PERS 2. Between his pension, his DCP balance, and what he and his wife have saved, the numbers worked. We ran them again. They worked again. Then he said the thing I hear more than almost anything else. “Let’s just give it one more year.” I asked him why. Markets felt shaky. Maybe a little more cushion. You know how it is. But I’d heard him say “one more year” the year before. And the year before that. At some point it stops being a financial decision. (He knew it too. He just hadn’t said it out loud yet.) When the math is done arguing with you Here’s what I’ve come to believe after working with public employees who are this close to the door. If you’ve got a pension coming, a DCP balance, and money in the bank, and the plan still checks out, no new number is going to set you free. A behavioral finance researcher named Daniel Crosby puts it bluntly. He says if you handed someone like Ron a crystal ball that guaranteed he’d be financially secure for the rest of his life, most people in his shoes still wouldn’t retire tomorrow. Sit with that for a second. If certainty isn’t the thing holding you back, then the problem was never the money. And no spreadsheet I build is going to fix a problem that isn’t on the spreadsheet. The two questions I started asking instead So now, when a client is clearly ready on paper but stuck in real life, I stop running projections for a minute. I borrow two questions from Crosby’s work. The first: if you knew for certain you’d be fine, would you walk away tomorrow? When the honest answer is no, that tells us something. There’s something work is giving you that doesn’t show up on a balance sheet. The second: what is that something? For a lot of folks, especially the ones who’ve spent decades inside one agency, work is where the people are. It’s the team. The problem to solve. The quiet pride of being good at something. Take that away on a Friday with nothing waiting on Monday, and the pension doesn’t help much. Crosby points out that men in particular tend to walk into retirement without much of a social life outside the job. I see it constantly. The financial plan is airtight and the life plan is blank. It doesn’t have to be a light switch One thing that’s helped my clients more than any withdrawal strategy is realizing retirement isn’t on or off. You don’t have to grind full-time until a Friday and then do nothing forever. Some of the happiest retired public employees I work with eased out of it. They went part-time first. Picked up some consulting. Kept one foot in the thing that gave them purpose while finally making room for the rest of their life. That middle path has a financial bonus too. Every year you hold off tapping your DCP or your personal savings is a year that money keeps working. Your pension gives you a foundation most private-sector folks would envy, which means you have more freedom to design a slow exit, not less. What actually fills the gap Crosby talks about five things the happiest retirees tend to have lined up before they leave. I think about them with clients now almost as much as I think about Roth conversions. Fun and leisure, the part everybody plans for. The social side, which most people don’t. Some kind of deep, absorbing work, paid or not, that makes you lose track of time. Something bigger than yourself, like volunteering or faith or community. And a reason to keep growing instead of coasting. Money really only buys the first one. The other four you have to go get on your own. That’s usually the part nobody warned them about. Where the planning actually comes in I’m a CPA, so I won’t pretend the numbers don’t matter. They do, and there’s real work to do before you leave. You have a pension option to lock in, and that survivor decision is permanent. You have a healthcare gap to bridge from your late 50s to Medicare at 65, and the PEBB rules deserve a careful look before you assume anything. You have Social Security timing to coordinate with everything else, and that one tends to reward patience more than people expect. That’s where I earn my keep. That’s the part I can build for you. But I’ve stopped pretending it’s the whole picture. A few honest next steps If you’re the one saying “one more year,” try Crosby’s first question this week. If certainty wouldn’t change your answer, the thing in front of you isn’t financial. Start sketching the life side while you’re still working. Who you’ll see. What you’ll build. What’s going to get you out of bed on a Tuesday in February. And let’s lock down the financial pieces so they can’t be the excuse: the pension election, the PEBB-to-Medicare bridge, the income plan that pulls from the right account at the right time. Ron and I are still working on his. The numbers were never really the holdup, and once he admitted that, the planning got a lot more useful. The plan on paper matters. I’ll always make sure yours is solid. But the retirement you actually want to live is a separate project, and it starts with being honest about what’s really keeping you at your desk. Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees.
Dale comes to our first video call with his statements already pulled up on his screen. He's a facilities manager for the county. Twenty-six years in, PERS 2, hoping to retire at fifty-eight. He's done the hard part. He saved steadily in his DCP. The money is there. So we start going through what he actually owns. Almost all of it sits in funds from one big, famous fund company. The kind of name you'd recognize from a commercial or a stadium. I ask him why those funds. He pauses. “I'm not sure,” he says. “They're a name I trust. I've seen them around forever.” I hear some version of that more often than you'd think. And it makes complete sense. We're wired to reach for what feels familiar. But familiar and better are not the same thing. And the space between them can quietly cost you. What the research actually found There's a simple experiment that shows this better than anything I can say. Researchers handed people two index funds and asked how they'd split their money. Same holdings. Same fee. Line by line, the exact same fund. The only difference was the name on the label, one familiar and one generic. There's no financial reason to prefer one over the other. The money should land somewhere near 50/50. It didn't. People put 65% into the familiar name and just 35% into the identical generic version1. They even guessed the unfamiliar fund was more likely to lose money, for what was literally the same investment1. The name didn't change anything inside the fund. It only changed how people felt about owning it. Why does that happen? Because familiarity lowers our sense of risk, whether or not the actual risk is any different2. We don't study the unfamiliar fund and decide it's riskier. We feel that it is, and then we look for reasons to back up the feeling. And before you assume this is a rookie mistake, it isn't. Even advisors managing money for wealthy clients show the same pull toward brand-name choices5. It's human, not amateur. Why the famous names tend to fall short Here's the part that surprises people. When you line up the actively managed funds from the big, famous fund families against the benchmarks they're trying to beat, most of them fall short. One analysis found that 69% of Goldman Sachs active funds lagged their benchmark or didn't survive. Even at Vanguard, a firm practically synonymous with smart investing, 63% of its active funds underperformed1. The star manager doesn't hold up much better. S&P tracks whether top funds stay on top, and not one of the top-performing U.S. stock funds at the end of 2020 was still in the top group four years later3. Not one. It gets worse once you realize the lineup you see today is already the highlight reel. The funds that stumbled badly were quietly closed or merged away, and their track records went with them1. So why do the recognizable names so often trail? Part of it is just math. Back in 1991, economist William Sharpe showed that after costs, the average actively managed dollar has to underperform the average index dollar by the amount of those costs4. Active and passive together own the whole market, so as a group the active side can't beat it after fees. Part of it is the business model. A big fund company gets paid for gathering assets, not for beating the market. A fund that grows from one billion to ten billion collects far more in fees whether or not it ever outperforms. And the name is recognizable largely because the firm spent a fortune making it that way. That spending comes out of someone's returns. Usually yours. This shows up beyond fund companies, too. Even in the “independent” advice world, private equity now controls close to a quarter of the assets under management6, which brings its own pressure on fees and service. None of that makes a firm bad. It just means the name on the door doesn't tell you whose interest comes first. What to do instead I don't want to leave you with a pile of discouraging data and no path forward. There's a better way to approach this. It just means trusting a different set of signals. Start with your pension. Your DRS pension is a stable, lifelong foundation that most private-sector savers will never have. That foundation is exactly what lets the rest of your money take sensible market risk, instead of reaching for whatever feels safest. From there, own broadly instead of betting narrowly. Almost no one beats the market reliably, and you can't know in advance who will, so own a wide slice of it and let it work. Then control the things you actually can. As a CPA, this is the piece I push hardest on. You can't dictate next year's return, but you can control what you pay in fees and taxes, and over a long retirement those add up. And ask better questions, of a fund or of the person recommending it. What does this fund cost? Can you explain why it's in my portfolio without pointing to a famous name or a recent hot streak? Are you a fiduciary, legally required to put my interest first? A measured next step is simple. Pull up your DCP and any IRA statements and write down what you own and what each piece costs. For every holding, ask whether you can explain why it's there, beyond the name. If you can't, that's worth a conversation, not a panic. Trusting the right things The point of all this isn't to stop trusting. Trust matters enormously in investing, because it's what keeps you in your seat when markets get scary. The problem is never that people trust. It's that so many of us trust the wrong things. So aim it carefully. Trust the weight of the evidence over the comfort of a logo you happen to recognize. When Dale and I rebuilt his portfolio, nothing about it would impress anyone at a dinner party. There were no names he'd recognize from a stadium. But he could explain every piece of it, and why it was there. That's the part that actually matters. Sources 1. Index Fund Advisors. “The Psychology of the Label: Familiar Names Can Make Poor Investments.” January 20, 2026. https://www.ifa.com/articles/psychology_label_familiar_names_make_poor_investments 2. Weber, E. U., Siebenmorgen, N., & Weber, M. “Communicating Asset Risk: How Name Recognition and the Format of Historic Volatility Information Affect Risk Perception and Investment Decisions.” 2005. https://scispace.com/pdf/communicating-asset-risk-how-name-recognition-and-the-format-2f8flbykyg.pdf 3. S&P Dow Jones Indices. “U.S. Persistence Scorecard.” https://www.spglobal.com/spdji/en/spiva/article/us-persistence-scorecard/ 4. Sharpe, William F. “The Arithmetic of Active Management.” 1991. https://web.stanford.edu/~wfsharpe/art/active/active.htm 5. Kostovetsky, L., & Warner, J. B. “Measuring Innovation and Product Differentiation: Evidence from Mutual Funds.” Journal of Finance, 2020. https://onlinelibrary.wiley.com/doi/10.1111/jofi.12853 6. AdvizorPro. “Private Equity Ownership in the RIA Space – 2025 Trends.” September 4, 2025. https://advizorpro.com/post/private-equity-ownership-ria-space Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees.
The spreadsheet that never says “enough” Greg is meeting with me, sharing a spreadsheet he built himself. He’s 54, a firefighter with more than twenty years on the job and a LEOFF 2 pension waiting at the end of it. He plans to hang up the gear in a couple of years. He has saved steadily for decades, put money into his DCP more years than not, and his numbers look good. And yet he keeps asking the same question three different ways. “But what if it’s not enough?” I hear some version of that from a lot of careful savers. They did everything right. They have the pension, the 457(b), and money set aside on top of it. On paper they are in great shape. The problem is they cannot feel it. You have been saving for a stranger There is a body of research that helps explain this. It comes from a UCLA professor named Hal Hershfield, who studies how we think about our future selves. His basic finding is a little strange. Most of us experience our future self almost like a different person1. Not quite a stranger, but not quite us either. That distance is not all bad. But it shapes every long decision we make about money. When you save for retirement, you are really saving for that other person down the road. The more connected you feel to them, the easier it is to make patient choices today. Here is the part I find most interesting. Hershfield and his colleagues tracked thousands of people over ten years. The ones who felt more similar to their future selves early on reported higher life satisfaction a decade later, even after accounting for income, age, and how satisfied they already were1. So the relationship you have with future you matters. And it keeps mattering long after you retire. Why the math feels scary even when it isn’t Greg saved well. He clearly cares about his future self. That should make retirement feel safe. But something flips at the finish line. Here is the strange part. He knows exactly how much money he has. What he does not know is how long it has to last. He could need it for five years. He could need it for thirty-five. That unknown is what makes careful people freeze. The worry is always the same. What if I run out? So they keep doing the thing that worked for twenty-plus years. They save. They wait. They tell themselves next year. The skills that make someone a great saver do not automatically make them a great spender. Those are different muscles. Your pension changes the equation This is where Washington public employees have an advantage most retirees do not. That “how long will it last” fear is mostly a problem for people living off a pile of savings alone. If your whole retirement is a 401(k) balance, every withdrawal feels like it shrinks the pile. Your pension works differently. It is income for life. It does not run out at year five or year thirty-five. It keeps paying as long as you do. When Greg and I separated his pension from his savings on that call, the question changed. It was no longer “will my money last.” A big chunk of his essential spending was already covered by a check that never stops. His savings and DCP sit on top of that floor. That is a very different feeling, and most people never reframe it that way. What actually helps A few things tend to move careful savers from frozen to comfortable. Start by naming your non-negotiables. What does your basic life actually cost each year? Housing, food, insurance, the ordinary stuff. Once you see that number, you can line it up against your pension and any Social Security you’ve earned, and see how much is already handled before you touch a dollar of savings. Then translate the plan into real money, not percentages. People hear that their plan has a high chance of success and still feel uneasy, because nobody can picture what a percentage means for their actual life. It lands better to say something concrete. You need this much to cover your life. You can comfortably spend this much more on the things you actually want. Give your money a job on purpose. Our brains do not treat all dollars the same, so use that. Earmark a specific withdrawal from your DCP for a specific trip, and it stops feeling like money leaving the pile and starts feeling like a plan you already made. And watch out for assuming future you wants exactly what present you wants right now. It comes up most on the big, hard-to-undo decisions. When you pick a retirement date, or decide when to claim Social Security, or weigh whether to move, it deserves a longer conversation than people usually give it. Spend some of it now One more idea from this work stuck with me. The early years of retirement, when you are healthy and active, are not guaranteed to last. Memories made with your family while everyone can still travel are worth something real, and you cannot buy them back later. Saving so hard that you skip those years does not protect your future self. It robs that person of memories they would have loved to have. Where to start You do not need to overhaul anything this week. Sit down and figure out what your basic year actually costs. Look at how much of that your pension covers before you touch your savings. Then have an honest talk with your spouse about what you want the first ten years of retirement to look like. If those numbers feel overwhelming, that is exactly the kind of thing worth walking through with someone who knows the Washington systems. You spent decades taking care of a future version of yourself. At some point, that person shows up. The kind thing is to let them enjoy what you built. Sources 1. Reiff, J. S., Hershfield, H. E., & Quoidbach, J. “Identity Over Time: Perceived Similarity Between Selves Predicts Well-Being 10 Years Later.” Social Psychological and Personality Science, 2019. https://www.anderson.ucla.edu/sites/default/files/documents/areas/fac/marketing/Hershfield/Reiff_Hershfield_Quoidbach_2019_SPPS.pdf The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees.
The number on the news isn't the number that mattersA corrections officer reaches out the week the latest inflation report makes the news. He is 54 and plans to retire at 57 on his PSERS 2 pension. He has saved steadily, mostly through his DCP. And now a headline has him rattled. “Prices went up almost 4 percent,” he says. “What does that do to my plan?” It is a fair question. Over the 12 months ending in April 2026, consumer prices rose 3.8 percent, the fastest pace in almost three years.1 But here is what I tell him, and what I tell most people who ask. The inflation number in the news is almost never your inflation number. Two people can retire into the same economy and face very different risk. The gap between them usually comes down to a few things they can actually control. So instead of reacting to the headline, we walk through three questions. Question one: what is your personal inflation rate? The national number is an average. It is built from a big basket of goods and services meant to represent the typical household, with categories like shelter, food, energy, and medical care each carrying a different weight.1 Think of it like a statewide weather report. It might say the average high is 60 degrees. That tells you almost nothing about what to wear in your own zip code. He sits near the calm end of that range. His house is nearly paid off. His spending is steady. His biggest splurge is a fishing trip each fall. Now picture a different retiree. She leaves work at 58 and bridges to Medicare on PEBB coverage, so she is paying a health premium for seven years. She is also driving more to help an aging parent, right as fuel prices climb. Her budget leans on categories that have been rising faster than the average. Energy jumped 17.9 percent over the year, and gasoline rose 28.4 percent.1 Research on older households points the same direction. Retirees tend to spend more on healthcare, and healthcare prices often rise faster than the broad index.2 Same 3.8 percent headline. Two very different realities. Question two: how much of your income already keeps up? This is where Washington public employees have a real advantage, and where the details matter. Some of your retirement income is built to rise with prices. Social Security usually gets an annual cost-of-living adjustment.2 Many DRS pension plans include a cost-of-living adjustment too. It is worth knowing exactly how yours works before you retire. Your plan handbook on the DRS website spells it out. Then there is everything that does not automatically rise. Your portfolio withdrawals usually do not come with a built-in raise unless you design the plan that way. The tools built specifically to fight inflation are Treasury Inflation-Protected Securities (TIPS), I bonds, and stocks.4 Stocks are not a reliable hedge in any single year. But over long stretches they have been one of the best defenses against rising prices.4 Over the last century, inflation has averaged roughly 2.9 percent a year.3 Cash and traditional bonds are the opposite. They pay you in fixed dollars, so high inflation quietly eats their real value.4 This is why your pension matters so much. It is an income floor that lets the rest of your money stay invested for growth. Question three: where are you on your timeline? Timing might be the most overlooked piece. High inflation early in retirement does lasting damage. If prices jump in your first few years, your baseline spending resets higher, and every future year builds from that higher number.3 Researchers compare this to sequence-of-returns risk. A bad stretch early, when your time horizon is longest, hurts far more than the same stretch later.3,4 The worst historical outcomes for retirees clustered around the high-inflation years of the late 1960s and 1970s.4 While you were working, a raise could help offset rising prices. In retirement, that built-in cushion is gone.4 The point is not to predict inflation. It is to build a plan flexible enough to absorb it. What actually helps A few measured steps, not a fire drill. Map your own basket. List your real spending categories and notice which ones run hot. For an early retiree on a PEBB bridge, that is often healthcare. This turns a vague worry into something you can measure. Know your two COLAs. Confirm how your DRS pension adjusts, and remember Social Security carries its own annual adjustment. Together they cover a meaningful share of your fixed costs. Keep real stock exposure. Because your pension covers the floor, your portfolio can stay invested for the long-term growth that actually outpaces inflation. Build a war chest. I generally like keeping around five years of planned withdrawals in high-quality, short-duration bonds, spread across pre-tax, Roth, and taxable accounts. That way you are never forced to sell stocks in a down year, and you keep flexibility on which dollars to spend for tax reasons. Stay flexible. In a hot year, maybe you skip the full raise on your withdrawals, or push a big trip out a few months. None of it is permanent. Early on, small adjustments protect the whole plan. The bottom line He does not need to forecast inflation. Neither do you. What he needs is a plan that already expects uncomfortable years and is ready for them. Room to adjust. Room to draw from the right accounts at the right time. Room to let long-term investments do their job. Inflation will always be part of retirement. The goal is not to eliminate it. It is to keep rising prices from quietly running your decisions. As a CPA and financial advisor, and a former public employee myself, that is the work I find most rewarding: turning a scary headline into a handful of choices you control. Sources
The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees.
The conversation no one wants to haveMost of the planning conversations I have with clients focus on offense. How much they've saved. How their DCP is invested. When to claim Social Security. Whether they should take Option 2 or Option 3 on their DRS pension. That's the fun stuff. But every once in a while, the conversation shifts to something quieter. The kind of risk you can't fix with a higher savings rate or a smarter tax strategy. What happens if you get sued? It's not a fun question. For someone who's spent thirty years building a retirement, though, it's worth sitting with for a few minutes. Picture a hypothetical client. Let's call her Sarah, a PERS 2 member with 29 years at a county public works department, planning to retire at 62. She's done everything right. Pension on track, DCP balance in the mid six figures, a paid-off house in Thurston County. Then one afternoon she's driving home from a doctor's appointment, misjudges a yellow light, and seriously injures another driver. That's the kind of moment umbrella insurance is built for. Why this still matters in retirementThe instinct in retirement is to assume liability risk goes down. The kids are grown. The commute is gone. Life slows down. The risk doesn't really disappear, though. It just moves. More driving for errands and appointments. More grandkids at the house. More travel. More volunteer roles. More time hosting friends and family. The real difference isn't probability. It's consequence. At 45, a major lawsuit is painful but recoverable. You still have decades of paychecks ahead. At 65, the savings you have are largely what you have1. Umbrella insurance sits on top of your auto and homeowners liability coverage and kicks in when those limits are exhausted2. For a few hundred dollars a year, it can add a million or more of protection. That's what makes it one of the more efficient pieces of a retirement plan. What about my DCP and other retirement accounts?Not all of your savings carry the same protection. The DCP, which is a 457(b) governmental plan, generally has strong creditor protection while the money stays inside the plan3. Most 401(k)s and 403(b)s sit in a similar category, so any old employer accounts you've held onto are typically in good shape too. The picture can shift when you roll your DCP to an IRA. That's a move many of my clients make at or near retirement for more investment flexibility and easier coordination of withdrawals. Under federal bankruptcy law, dollars rolled from a qualified plan generally keep their protection inside an IRA4. IRAs built from your own direct contributions, on the other hand, are protected only up to a federal cap, currently a little over $1.7 million per person, with state law filling in the rest beyond that. Your DRS pension itself is paid as monthly income and has its own set of rules around garnishment. For anything specific to your situation, that's a conversation with an asset protection attorney. The point here is just that "I have a lot in retirement accounts" doesn't automatically mean "I'm fully protected" in every scenario. 5 mistakes I see people makeAssuming all retirement money is untouchable. The protection picture is uneven, especially after rollovers. Once money leaves your DCP or an IRA and lands in your checking, savings, or brokerage account, the protection often changes3. RMDs that sit in cash, or large withdrawals set aside for taxes, can become exposed. Letting underlying coverage drop too low. Most umbrella carriers require minimum liability limits on your home and auto policies. If you trim those limits to save money in retirement, you can accidentally disqualify yourself from your own umbrella policy. Always ask your insurance agent what minimums you need to maintain5. Assuming new risks are automatically covered. Retirement often brings new toys and new responsibilities. A boat, a second home, a rental property, a board seat at the HOA or a nonprofit. Some of those are covered. Some require a separate endorsement. Some are excluded altogether. Tell your insurance agent when something meaningful changes. Waiting until you feel at risk. Umbrella policies only cover incidents that occur after coverage is active5. You can't buy a policy the week after a car accident and expect it to apply. The right time to put coverage in place is when nothing is happening. Treating it as set-it-and-forget-it. A policy that fit at 58 may not fit at 70. Home values rise, assets grow, liability costs change. Build an annual insurance review into your planning routine, the same way you'd review your pension option or your beneficiary designations. A simple way to size your policyThe common rule of thumb is to match coverage to your net worth. That's a fine starting point, but it ignores the layers of protection you may already have. A more honest version of the math: Start with your net worth. Then subtract home equity that's protected under Washington's homestead exemption. Under RCW 6.13.030, the exemption is the greater of $125,000 or your county's median single-family home sale price from the previous year6. So the protection varies a lot depending on where you live. A homeowner in King or Snohomish County gets meaningfully more shielded equity than someone in a rural county, and the exemption applies to your equity, not the home's full market value7. Next, subtract retirement accounts that already have strong creditor protection. Then subtract the liability limits already in place on your auto and homeowners policies. What's left is a rough estimate of the gap an umbrella policy might need to fill. One quick note on pricing. The first million of umbrella coverage is usually the most expensive. After that, each additional million is often much cheaper. The difference between "barely enough" and "comfortably more than enough" may only be a couple hundred dollars a year. A few measured next stepsIf you don't have an umbrella policy, ask your insurance agent for a quote and a clear list of what isn't covered. If you do have one, pull up the declarations page and check two things. First, are your underlying auto and home liability limits high enough to keep the umbrella in force? Second, are legal defense costs paid inside or outside the policy limits?That second detail can quietly cut your real coverage in half during a serious claim. For someone in Sarah's spot, with a DRS pension foundation, a healthy DCP balance, and a house with real equity, umbrella insurance won't show up on a performance report. It doesn't compound over time. But it's one of the quieter pieces of a well-built retirement plan, and worth getting right while nothing is happening. Sources1. Sheppard Law Firm. "Never Go Without an Umbrella." https://www.sheppardlawfirm.com/never-go-without-umbrella/ 2. Investopedia. "Umbrella Insurance Policy." https://www.investopedia.com/terms/u/umbrella-insurance-policy.asp 3. Equifax. "How to Protect Your Retirement Account From Creditors." https://www.equifax.com/personal/education/life-stages/articles/-/learn/protect-retirement-account-from-creditors/ 4. Investopedia. "Is My IRA Protected in a Bankruptcy?" https://www.investopedia.com/ask/answers/081915/my-ira-protected-bankruptcy.asp 5. National Association of Plan Advisors. "Case of the Week: Creditor Protection and Retirement Assets." January 2025. https://www.napa-net.org/news/2025/1/case-of-the-week-creditor-protection-and-retirement-assets/ 6. Washington State Legislature. RCW 6.13.030, "Homestead exemption amount." https://app.leg.wa.gov/rcw/default.aspx?cite=6.13.030 7. Washington State Legislature. Chapter 6.13 RCW, "Homesteads." https://app.leg.wa.gov/rcw/default.aspx?cite=6.13&full=true Why the Year You Retire Might Matter More Than How Much You've Saved
The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees. Two retirees, same plan, very different endings Imagine two retirees with identical financial plans. Both have a $1 million portfolio. Both use a 60/40 allocation. Both follow a 4% withdrawal rate adjusted for inflation. Both plan for a 30-year retirement. The only thing that's different is the year they retired. One walked out the door at the end of 1973. The other walked out at the end of 1975. Just two years apart. Thirty years later, the 1973 retiree finished with about $280,000. The 1975 retiree finished with nearly $3.4 million¹. Same portfolio. Same strategy. Same length of retirement. Two very different outcomes. I came across this comparison in a recent research paper, and I haven't been able to stop thinking about it. What the research actually looked at The paper, written by Yorgos Argyros, analyzed nearly a century of market data going back to 1929². It studied 97 different 30-year retirement cohorts and asked a question that doesn't get nearly enough attention in retirement planning. How much does your exact retirement date affect the outcome of your plan? Not whether you retire at 55 or 60 or 65. But whether you retire this year, next year, or two years from now. For each retirement life cycle, the study tested five different retirement dates. The original date. One year earlier. Two years earlier. One year later. Two years later. Retiring exactly on schedule was only the best choice about 15% of the time. Delaying by one or two years was the best choice in nearly two-thirds of the historical cohorts¹. And here's the part that stopped me cold. Of the scenarios where the retiree actually ran out of money before the 30-year mark, every single one could have survived just by shifting the retirement date within that two-year window¹. Not a different withdrawal rate. Not a different asset allocation. Just a different year. Why timing has such an outsized effect Most of us have heard of sequence of returns risk. The idea that when bad returns show up matters as much as how bad they are³. A losing year early in retirement does more damage than the same losing year later, because you're pulling money out of a shrinking pile. But the research separates this risk into two pieces that I think are worth understanding. The first is what the author calls cohort risk. This is simply the risk of retiring into a particular market environment. Someone who retired in the early 1980s walked into a fundamentally different decade than someone who retired in the late 1960s¹. The second is pure sequence risk. The order of returns within your retirement period working against you. When he broke down the numbers, he found that roughly 75% of the variation in retirement outcomes came from cohort risk. Only about 25% came from sequence risk¹. In other words, three-quarters of how your retirement turns out depends on which decade you retire into. Most of the strategies financial advisors talk about (dynamic withdrawals, guardrails, glide paths) operate inside that 25% slice. Your retirement date is one of the few levers that can move you into a different cohort entirely. Bigger nest eggs sometimes led to worse results Here's another finding that surprised me. When the study connected the saving years to the retirement years, it found that larger portfolios at retirement often led to worse outcomes¹. The explanation makes sense once you sit with it. The same strong bull market that builds an unusually large portfolio can also pull future returns into the present. By the time you retire, much of the good news may already be reflected in prices. The next decade then has a harder time keeping up. For Washington State public employees, this is worth pausing on. If your DCP balance has grown rapidly over the last several years, that's a great thing. But the portfolio balance itself doesn't tell you everything about what comes next. The three-part playbook, in priority order The research lays out three strategies, and the order matters. First, look at the retirement date itself. This is the most powerful lever because it's the only one that directly addresses cohort risk¹. That doesn't have to mean working full time for two more years. It could mean part-time work, consulting, or using a war chest of three to five years of withdrawals in short-duration bonds so you can delay touching the equity side of the portfolio. Second, if you can't or won't delay, lower the starting withdrawal rate. In the analysis, dropping from 4% to 3.5% eliminated every historical failure in the bottom third of cohorts¹. On an $800,000 portfolio, that's the difference between starting with $32,000 of withdrawals instead of $28,000. The trade-off is real, but it buys flexibility during the most fragile years. Third, use dynamic spending rules. Guardrails and other flexible withdrawal approaches⁴ can help you respond to bad early returns by trimming spending temporarily. They don't change the market you retired into, but they can soften the blow if the first decade is rough. What this means for PERS, TRS, and LEOFF members If you're a Washington State public employee, you already have something most private sector retirees don't. A pension. Your DRS pension is a guaranteed income floor that isn't subject to market timing risk. That's a real advantage, and it gives you more flexibility on the other three levers than you might realize. If the next decade turns out to be a difficult one for retirees, your pension keeps paying regardless. That means your portfolio has more breathing room to recover, and you have more room to adjust the rest of the plan, whether that's lowering the initial withdrawal rate, leaning on a war chest, or even shifting how your equity exposure evolves over time⁵. It also means the retirement date question is worth taking seriously. Not because you should panic about market valuations. But because retiring on a specific birthday or a specific year, just because the plan always assumed that date, may be worth a second look. The research isn't saying everyone should delay retirement. It's saying retirement timing deserves more attention than it usually gets. Sources
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Content is for informational purposes only and does not constitute personalized financial or investment advice. Consult with a qualified financial advisor to discuss your individual circumstances before making any financial decisions.
AuthorsBob Deal is a CPA with over 30 years of experience and been a financial planner for 25 years. Archives
July 2026
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