Retirement Planning in Texas — The Complete Guide.
A phase-by-phase walkthrough of the decisions that shape retirement in Texas — from a decade out through the years in retirement. Written plainly, organized by when you'll face each decision, with the Texas-specific layer that most national guides miss.
What's in this guide
Who this guide is for
If you live in Texas — Houston, Sugar Land, The Woodlands, Katy, Austin, Dallas, San Antonio, El Paso, or anywhere in between — and you're somewhere between ten years away from retirement and ten years into it, this guide is written for you. The structure works from the earliest planning window backward and forward through the years you're most likely to read it: each phase covers the decisions that come due during that window, the planning moves that compound best when started early, and the references to deeper articles when you want to dig further.
The guide doesn't replace a comprehensive financial plan tailored to your specific situation. It's a map — showing what to look for, what to think about, and when each decision tends to land. It also doesn't replace conversation with a CPA on taxes, with an estate attorney on documents, or with an insurance specialist on coverage; we'll touch all three, but the guide is written from a financial planner's perspective and assumes you'll coordinate with the specialists when the work calls for it.
One framing note before we start: retirement is not a single event but a series of decisions across roughly 15 years. The decisions that get the most attention — when to claim Social Security, when to start RMDs, what to do with the 401(k) — are usually the last in a longer sequence of choices that meaningfully shape how much you have to work with when those decisions arrive. The earlier you start, the more your options.
Ten years out: build the foundation.
Ten years before your target retirement date is when most of the foundation work happens. The decisions you make in this window matter less for the year-to-year texture of your life and more for what the next twenty years look like. The work is unglamorous: maximize tax-advantaged saving, get the asset allocation right, build protection for the downside cases, and start running the numbers.
Maximize tax-advantaged saving
The 401(k), 403(b), or 457(b) at work is your primary vehicle. If you're 50 or older, the catch-up provision lets you contribute an additional $7,500 above the regular limit (and SECURE 2.0 increased the catch-up for ages 60–63 starting in 2025). If you have a high-deductible health plan, the HSA may be the most tax-efficient savings vehicle available to you — tax-deductible on the way in, tax-free growth, tax-free withdrawals for qualified medical. For households earning above the Roth IRA income limit, the backdoor Roth remains available (subject to pro-rata rule complications). For self-employed Texans, SEP-IRAs and solo 401(k)s allow significantly higher contributions than W-2 employees can access.
Get the asset allocation right
Your allocation should reflect both how much investment risk you can stomach (tolerance) and how much your plan can absorb (capacity). For most pre-retirees ten years out with steady income, the math supports a portfolio dominated by equities — typically 70–90% — with the rest in high-quality bonds. The case for moderating risk grows as the retirement date approaches; we'll cover the glide-path question more in Phase 2.
Asset location across account types
If you have meaningful balances across a 401(k), Roth IRA, and taxable brokerage account, where each holding lives matters. Asset location — bonds in tax-deferred, equities in Roth, tax-efficient holdings in taxable — can add 25–75 basis points of after-tax return per year without changing the underlying investments at all. Most pre-retirees haven't done the work because their accounts grew at different times in different places; ten years out is a good moment to take a single view of the household portfolio.
Address concentrated positions
For Houston-area professionals — particularly those at ExxonMobil, Chevron, Phillips 66, Shell with vested company stock — a single position can grow to 30%, 40%, or more of net worth without anyone deciding to make it that way. Strategies for unwinding concentration include scheduled diversification, exchange funds, charitable strategies, and (for ESOP/401(k) holdings) the NUA election at separation. The longer the runway, the more options.
Protection: the bottom of the iceberg
Disability insurance matters more than most pre-retirees give it credit for — your future earnings are the largest asset on the balance sheet, and disability is statistically more likely than premature death for working-age adults. Common coverage gaps include reliance on employer-only group coverage (often limited, often taxable, often portable in name only) and lack of coverage for self-employed earners. Long-term care insurance is more often appropriate to evaluate in Phase 2, but if you're a particularly young retirement-planner — say, 50 with a family history of long-term care need — it may merit a Phase 1 conversation.
Start running the numbers
A retirement plan isn't a static document; it's a regularly-updated set of projections about future cash flow, asset values, and tax outcomes. Ten years out, the projection's job is to confirm the saving rate is consistent with the target retirement date and lifestyle. We're not yet trying to pin down exact monthly retirement income — that's a Phase 2 question — but we want to know if the trajectory is on track or needs adjustment.
Five years out: the decisions get specific.
Five years before retirement is where the abstractions start becoming concrete. You can see the destination from here. The decisions in this window have a larger effect on the next 30 years of after-tax wealth than almost anything else you'll do. The work shifts from accumulation discipline to specific decision modeling.
The Roth conversion runway
The years between retirement and the start of required minimum distributions (age 73 or 75 under SECURE 2.0) are typically the lowest-tax years of your life — wages have stopped, Social Security may not yet have started, and the only meaningful income is what you choose to take from accounts. This is the window for Roth conversions. Done carefully — bracket-aware, IRMAA-aware, multi-year — Roth conversions in this window can produce six-figure lifetime tax savings for households with significant pre-tax balances. Done carelessly, they can cost as much as they save.
Employer stock and the NUA decision
If you hold company stock inside your 401(k) — particularly common at ExxonMobil, Chevron, Phillips 66, and other Houston-area energy companies — the Net Unrealized Appreciation (NUA) election at separation is one of the more valuable tax features in retirement planning. The mechanics are specific and one-shot: a single lump-sum distribution in one tax year, with the employer stock moved to a taxable brokerage account, paying ordinary income only on the original cost basis and long-term capital gains on the appreciation when eventually sold. If you have this situation, model it carefully years before separation — last-minute decisions here are expensive.
Healthcare bridge
If you retire before 65, Medicare hasn't started yet, so you need to bridge healthcare coverage. Options: COBRA from the prior employer (expensive, time-limited), a spouse's employer coverage, an ACA marketplace plan, or in some cases a retiree health benefit from a prior employer. ACA premium subsidies are income-tested, which creates an interesting interplay with Roth conversions: a conversion year may eliminate the subsidy, so the pre-Medicare conversion math is more nuanced than it first appears.
Social Security election modeling
Social Security claiming is the largest single income decision in retirement for most households. For couples, it's particularly important: the higher earner's claiming age doesn't just affect the higher earner — it sets the survivor benefit that the longer-lived spouse will receive for life. The right approach involves running scenarios at 62, full retirement age, and 70 for each spouse, modeling household outcomes across plausible mortality scenarios, and layering Medicare timing and IRMAA brackets on top.
Pension lump sum vs. annuity
For Houston-area retirees with defined-benefit pensions — many ExxonMobil engineers, Chevron retirees, healthcare professionals at Texas Medical Center systems, retired military and federal employees — the lump-sum-vs-annuity election is consequential and largely irreversible. The decision turns on the implied rate of return of the annuity vs. realistic portfolio assumptions, your spouse's situation, your health, your existing guaranteed-income floor, and your tolerance for managing the lump-sum risk yourself.
The five-year checklist
A specific year-by-year sequence makes the abstract specific. We've laid out a 5-year retirement-readiness checklist that walks through the most important moves: Year 5 (income map), Year 4 (stress test), Year 3 (tax position), Year 2 (insurance and estate), Year 1 (logistics and rehearsal), Year 0 (retirement day). It's not a script — every household's sequence is different — but it gives a structure to push against.
At retirement: the transition year.
The year you actually retire is its own phase. Several large decisions cluster around this point, and the sequence in which you make them matters more than you might expect. The cash flow shifts from earning income to drawing it. Medicare enrollment becomes time-sensitive. Account rollover decisions become final. The decisions you defer to "after I settle in" sometimes get harder to undo than the ones you make in the first 90 days.
Medicare enrollment
If you're turning 65 in retirement year and not still on employer coverage, Medicare enrollment is time-sensitive. The Initial Enrollment Period spans the three months before to three months after your 65th birthday; missing it can trigger lifetime late-enrollment penalties on Part B (10% for each year delayed) and Part D (1% per month). For people still working with employer coverage past 65, the rules differ — large-employer plans (20+ employees) generally allow Medicare deferral; small-employer plans do not. The choice between Medicare Advantage and original Medicare + Medigap deserves an explicit conversation, not a default selection.
Social Security filing — or not
If you've decided to file at 62 or full retirement age, the filing happens here. If you've decided to delay to 70, no filing is needed yet — but understanding the impact on cash flow during the gap years matters. Many households use the years between retirement and Social Security claiming to do aggressive Roth conversions, since taxable income is at its lifetime low.
401(k) rollover decisions
Your retirement-account rollover decision is irreversible in important ways. The choice between leaving the 401(k) where it is, rolling to a new employer's plan, or rolling to an IRA turns on costs, investment options, distribution flexibility, creditor protection, and tax-planning optionality (including the NUA election if you hold employer stock). For ExxonMobil and other large-employer plan participants, "leave it" often beats "roll it" on cost; for smaller-employer plans, rollover-to-IRA more often wins.
The sustainable withdrawal question
How much can you safely spend from the portfolio? The "4% rule" (popularized by the Trinity study) is a useful starting heuristic but not the right answer for everyone — your withdrawal rate should reflect your portfolio composition, time horizon, flexibility, and the order in which you experience returns. Sequence-of-returns risk is at its highest in the first decade of retirement, which is why the year-one decisions matter so much more than year-twenty decisions.
Insurance review
At retirement, several insurance decisions resolve. Disability insurance — which was protecting earned income — usually becomes unnecessary once earned income stops. Term life insurance whose purpose was income replacement may no longer be needed. Long-term care insurance, on the other hand, becomes more pressing — premiums rise meaningfully each year past age 60, and underwriting tightens.
In retirement: the long steady state.
The years after the retirement transition are about staying on track. The big decisions are behind you; the work shifts to maintenance — annual tax-aware withdrawals, periodic rebalancing, RMD coordination, occasional life-event-driven recalibrations. Two specific moments add complexity: the year RMDs begin, and the year the first spouse dies. We'll touch both.
The RMD years
At 73 (or 75 for those born 1960 or later under SECURE 2.0), required minimum distributions from traditional IRAs and 401(k)s begin. For households who didn't do Roth conversions in earlier phases, RMDs can push taxable income up significantly, with knock-on effects on IRMAA brackets and Social Security taxation. Coordination matters: which accounts produce the RMD, which holdings get sold, whether to use qualified charitable distributions to satisfy part of the RMD without creating taxable income.
IRMAA management
Once on Medicare, every dollar of AGI two years prior potentially affects Medicare premiums. The brackets are cliffs — one dollar can move you to the next tier — so IRMAA management matters more than the marginal income-tax bracket for many retirees. Capital gain realization, Roth conversion timing, deferred-comp distributions, and pension lump-sum elections all enter the same conversation.
Charitable giving via QCDs
For charitably-inclined retirees over 70½, qualified charitable distributions from a traditional IRA are the most tax-efficient charitable vehicle available — the money goes directly from the IRA to a qualifying charity, doesn't enter taxable income, doesn't increase AGI for IRMAA, and counts toward the RMD. The dollar value of this feature compounds over a 20-year retirement.
Estate documents in active use
Your Texas estate plan — will, durable power of attorney, medical power of attorney, HIPAA authorization — should be reviewed every few years and after major life events. The financial-planning coordination layer involves making sure beneficiary designations on IRAs, 401(k)s, Roth IRAs, life insurance, and annuities are current. Out-of-date beneficiaries are the single most common estate-planning error.
Survivor planning
When one spouse dies, the household goes from two Social Security benefits to one, from filing married-filing-jointly to filing as single (with single-bracket tax rates), and from two Medicare premium calculations to one. The financial plan needs to anticipate this — both spouses need to understand what the survivor's situation will look like, and the financial pieces (account access, beneficiary status, decision-making authority) need to be in working order before the loss. This is part of why a joint advisor relationship matters more than people sometimes appreciate.
Ongoing review
Annual reviews — looking at the prior year's tax return, this year's projected income, RMD requirements, IRMAA exposure, account performance, and any life events on the horizon — keep the plan current. Event-driven check-ins (a market correction, a health change, a family situation, a tax-law change) bridge the gap between annual reviews. The plan that worked at 65 is not the plan that fits at 75; both should be living documents.
The Texas-specific layer
Most national retirement guides treat retirement planning as a federal-tax problem. For Texans, the state-level layer adds meaningful features (and a few complications) that change how some decisions look. The big Texas-specific elements:
No state income tax
Texas has no state income tax. The advantage shows up in Roth conversions (federal-only tax cost), capital gain realization (federal-only), pension and IRA distributions (federal-only), and Social Security (no state-level taxation in Texas). It does not affect federal tax brackets, federal IRMAA brackets, or federal RMD requirements. It's also offset to varying degrees by property taxes, which are among the highest in the U.S.
Property taxes — the offset
Texas property tax rates run 2–3% of assessed value, several times the national median. For most Texas retirees, the property tax bill is the largest non-federal annual tax — and it doesn't decrease in retirement (other than Texas's homestead and over-65 exemptions, which provide meaningful but limited relief). Property tax planning, including the over-65 exemption and tax-freeze provisions, deserves explicit attention.
Community property
Texas is one of nine community-property states. Assets acquired during marriage are generally community property; assets owned before marriage or received by gift or inheritance are separate property. The implications are larger than most couples realize: at the first spouse's death, community-property assets receive a full step-up in basis on both halves (not just the deceased spouse's half). This double-step-up is a meaningful Texas advantage for households with appreciated taxable assets.
Texas-specific estate planning features
Texas has no state estate or inheritance tax. Texas probate offers independent administration — a streamlined process that's significantly more efficient than most states' supervised administrations. These features make Texas estate planning meaningfully simpler than in many other states.
Industry context — energy, healthcare, NASA, federal employees
Houston's economy concentrates several retirement situations that require specific planning expertise. Energy-sector retirees often hold significant amounts of employer stock with NUA-eligible appreciation. NASA/JSC federal employees retire under FERS, with TSP balances and the complications of federal pension claiming and FEHB-to-Medicare coordination. Texas Medical Center healthcare professionals span 403(b) plans, 457(b) plans, hospital pensions, and private practice arrangements. Each of these has industry-specific layers worth specific attention.
Property and lifestyle considerations
For retirees considering relocation within Texas — Houston to Hill Country, urban to coastal, big city to small town — the planning involves property tax differentials, healthcare access (Texas Medical Center is hard to replicate anywhere else in the state), family proximity, and lifestyle priorities. For retirees considering moving to Texas from other states, the move can produce substantial long-run tax savings; the rules around residency establishment matter.
Common questions
When should I start retirement planning?
Earlier is better, but the highest-impact planning window is roughly 5–10 years before your target retirement date. Earlier than that, the work is mostly about consistent saving and getting the foundation right; later than that, many decisions have already been locked in. Five years out is when the specific decisions — Roth conversions, Social Security election modeling, healthcare bridge planning, pension elections — start to matter most.
How much do I need to retire?
The honest answer is that it depends on your annual spending requirement, the share of that spending covered by guaranteed sources (Social Security, pensions), your time horizon, your portfolio composition, and your flexibility. A common rule of thumb: 25–30 times your annual spending requirement net of guaranteed income, assuming a 30-year retirement and a balanced portfolio. For a couple needing $80,000 a year above $50,000 of guaranteed income, that's roughly $750,000–$900,000 in invested assets. The right number for you involves running specific projections for your situation, not applying a rule of thumb.
Should I do Roth conversions in retirement?
Often yes, particularly during the gap years between retirement and the start of RMDs. The case strengthens when you have significant traditional IRA balances, when you expect to be in a higher tax bracket once RMDs begin, when your heirs would face higher brackets than you, and when you have non-IRA assets to pay the conversion tax. The case weakens when current-year tax brackets are already high (a transition year of large pension distribution), when IRMAA cliffs are nearby, and when charitable bequests of the IRA are the plan. More detail here.
When should I claim Social Security?
For most single people in average health, full retirement age (66–67 depending on birth year) is a reasonable default. For most married couples, the higher earner should delay to 70 if at all possible — that locks in the largest possible survivor benefit, which is the longer-lived spouse's income for life. The lower earner can claim earlier, including at 62, depending on cash flow needs. More on Social Security claiming for couples.
What's the best Medicare choice — Advantage or Medigap?
It depends on your health, your preferred providers, your travel patterns, and your tolerance for managing care. Medicare Advantage typically has lower premiums but requires network discipline and prior authorizations. Original Medicare + Medigap costs more but gives you any-doctor-anywhere flexibility. The decision matters most because switching from Advantage back to Medigap later in life can require new underwriting, which can become difficult or expensive. More detail here.
Do I need long-term care insurance?
Maybe. For households with $2.5M+ in liquid assets above other retirement needs, self-insurance is reasonable. For households with more constrained assets, some level of LTC insurance — traditional, hybrid life-with-LTC, or a partnership-qualified policy — typically deserves consideration. Underwriting tightens significantly after age 60; the planning window matters. More detail for Texans.
What about inflation?
Retirement plans should assume that the cost of living rises over the planning horizon. Social Security benefits have a cost-of-living adjustment, but most other guaranteed-income sources do not (notably, most private pensions are not inflation-adjusted). The portfolio is generally the inflation-protection mechanism — equity exposure provides long-run growth that outpaces inflation, even though short-term volatility is real. Plans that rely too heavily on guaranteed sources may underperform against inflation over a 30-year retirement.
What happens to my plan if one spouse dies?
The household goes from two Social Security benefits to one (the larger), from married-filing-jointly to single-filer tax brackets, from two Medicare premium calculations to one, and from a joint financial-planning conversation to a single one. The financial plan should anticipate this — both spouses should understand the survivor's situation, accounts should have correct beneficiary designations and titling, estate documents should be current, and decisions about LTC insurance, life insurance, and survivor benefits on pensions should account for the asymmetric situation each spouse might face.
How often should I review my plan?
Annually at minimum, plus event-driven check-ins for major changes — market corrections, health changes, family events, tax-law changes, large liquidity events. The annual review covers prior-year actuals against projection, current-year planning (Roth conversion size, charitable strategy, IRMAA exposure), and forward-year considerations (upcoming RMDs, beneficiary updates, insurance reviews).
What does retirement planning cost?
For households working with a financial advisor on ongoing planning, total cost typically runs 0.50%–1.25% of assets under management for the advisory fee, plus the expense ratios of the underlying investments (which can be very low for index portfolios). Some advisors work on flat retainers or hourly. The all-in cost should be transparent and documented. More on choosing an advisor.
How I can help
I'm Alan Birsinger — an independent, Texas-licensed financial advisor based in Houston, working with Texas residents from across the state. I work with retirees, pre-retirees, business owners, and young adults building wealth, primarily on the planning issues this guide covers: retirement planning, retirement income, 401(k) rollovers, IRA rollovers, pension lump-sum decisions, comprehensive financial planning, investment management, asset allocation, Social Security and Medicare planning, long-term care insurance, life insurance, annuities, qualified retirement plans, business planning, and education funding.
If any of what you've read here is the kind of work you'd like to talk through, I offer a complimentary, no-obligation conversation. It's a chance to lay out your situation, see if we're a fit, and figure out next steps either way.
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