Are You In the 2% Club in Retirement? With Joe Schmitz Jr.
Joe Schmitz Jr. and Jeremy Keil explore the 2% Club of retirees and the unique challenges that come with significant retirement savings and a pension.
Most retirement conversations focus on one question:
Will I have enough?
But there’s another retirement challenge that doesn’t get talked about nearly enough:
What happens when you’ve done everything right?
Joe Schmitz Jr. has been working with a very specific group of retirees he calls the 2% Club.
His definition:
People who have both:
- A pension
- And $1 million or more saved for retirement
That combination creates opportunities.
But it also creates a different set of retirement decisions.
Success Creates Different Problems
For decades, these retirees did what they were told:
- Saved consistently
- Avoided lifestyle inflation
- Built meaningful retirement assets
- Earned pensions
- Stayed disciplined
Now retirement arrives…
…and suddenly the challenge isn’t accumulating wealth.
It’s using it wisely.
Joe shared one statistic that stood out:
“80% of people out there will pay no federal income taxes in retirement… while this 2% club is part of that 20% that will have to pay taxes and typically much more.”
That means retirement planning shifts.
Less focus on accumulation.
More focus on:
- Taxes
- Spending
- Distribution strategy
- Legacy
- Purpose
Why High-Income Retirees Can Accidentally Become Under-Spenders
One of the most interesting parts of this conversation was Joe’s concept of the Midwestern Millionaire.
His description:
Hard-working.
Frugal.
Disciplined.
Excellent savers.
Often reluctant spenders.
And that creates an unexpected retirement problem.
People who spent 40 years training themselves to save don’t automatically become comfortable spending.
Even when they can afford it.
Joe described clients who had millions saved but still struggled emotionally to use their money because restraint had become part of their identity.
That’s where retirement planning becomes less about spreadsheets and more about permission.
The Four Places Your Money Can Go
Joe offered a simple framework.
Your money ultimately goes somewhere.
You can:
- Spend it
- Gift it
- Give it
- Pay taxes on it
That framework creates an important question:
If you’re not spending your money intentionally…
where is it going?
That doesn’t mean everyone should spend aggressively.
But it does mean retirees should think intentionally about:
- Lifestyle
- Family impact
- Charitable goals
- Taxes
Because choosing not to decide is still a decision.
Pension Decisions Deserve More Attention Than Most People Give Them
Joe also emphasized something I see frequently:
People often make pension elections based on coworkers.
Someone retires.
Takes a lump sum.
Everyone follows.
But pension elections are often irreversible.
Joe’s advice was simple:
Run the numbers.
Questions like these matter:
- Lump sum or monthly pension?
- Survivor benefits?
- Age differences between spouses?
- Existing assets?
- Insurance needs?
The right answer isn’t universal.
It’s personal.
Don’t Let Tax Fear Control Retirement
For some retirees, fear of crossing an income threshold and triggering Medicare IRMAA surcharges becomes bigger than the actual cost itself.
Joe’s point wasn’t to ignore taxes.
It was to understand them.
Tax planning matters.
But taxes shouldn’t become the only goal.
Because avoiding taxes at all costs can sometimes prevent people from living the retirement they actually built.
The Real Goal
One story Joe shared captured this perfectly.
A retired couple promised each other they’d spend intentionally during their early retirement years.
Two years later…
They had spent nothing.
Not because they couldn’t.
Because they hadn’t learned how.
Eventually they created a spending plan and began enjoying experiences they had delayed for decades.
That’s the shift retirement requires.
You don’t stop being disciplined.
You simply redirect that discipline.
The Bottom Line
Retirement success isn’t measured by how much money you leave untouched.
It’s measured by whether your money helps support the life you actually wanted.
Because after decades of saving…
Retirement planning becomes deciding what your wealth is for.
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About the Author:
Jeremy Keil, CFP®, CFA is a retirement financial advisor with Keil Financial Partners, author of Retire Today: Create Your Retirement Income Plan in 5 Simple Steps, and host of the Retirement Today blog and podcast, as well as the Mr. Retirement YouTube channel.
Jeremy is a contributor to Kiplinger and is frequently cited in publications like the Wall Street Journal and New York Times.
Additional Links:
- Buy Jeremy’s book – Retire Today: Create Your Retirement Master Plan in 5 Simple Steps
- “How Much Taxes Will Retirees Owe on Their Retirement Income?” – Center for Retirement Research at Boston College
- Peak Retirement Planning
- Joe Schmitz Jr. on YouTube: https://www.youtube.com/@peakretirementplanninginc.
- Articles by Joe Schmitz Jr. on Kiplinger
- “Joe Knows Retirement” podcast with Joe Schmitz Jr.
- Books by Joe Schmitz Jr.
Connect With Jeremy Keil:
- Keil Financial Partners
- LinkedIn: Jeremy Keil
- Facebook: Jeremy Keil
- LinkedIn: Keil Financial Partners
- YouTube: Mr. Retirement
- Book an Intro Call with Jeremy’s Team
Media Disclosures:
Disclosures
This media is provided for informational and educational purposes only and does not consider the investment objectives, financial situation, or particular needs of any consumer. Nothing in this program should be construed as investment, legal, or tax advice, nor as a recommendation to buy, sell, or hold any security or to adopt any investment strategy.
The views and opinions expressed are those of the host and any guest, current as of the date of recording, and may change without notice as market, political or economic conditions evolve. All investments involve risk, including the possible loss of principal. Past performance is no guarantee of future results.
Legal & Tax Disclosure
Consumers should consult their own qualified attorney, CPA, or other professional advisor regarding their specific legal and tax situations.
Advisor Disclosures
Alongside, LLC, doing business as Keil Financial Partners, is an SEC-registered investment adviser. Registration does not imply a certain level of skill or expertise. Advisory services are delivered through the Alongside, LLC platform. Keil Financial Partners is independent, not owned or operated by Alongside, LLC.
Additional information about Alongside, LLC – including its services, fees and any material conflicts of interest – can be found at https://adviserinfo.sec.gov/firm/summary/333587 or by requesting Form ADV Part 2A.
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