Three Tips to Successfully Transition into Retirement

Peter Pabich |

For many of us, retirement at first glance can be extremely appealing: fewer emails, fewer meetings, less travel, and more freedom. But, for many, the actual transition into retirement can be difficult - mentally, emotionally, and financially. 

Having helped hundreds of individuals successfully navigate retirement, we’ve seen a number of common themes that many encounter along their journey. If you’re contemplating your own upcoming retirement, read on to learn more about our top three tips to ensure you’re fully prepared to enjoy this next phase of life.

Determine how you’ll spend your time in retirement - and, ease into it

Oftentimes, individuals are so busy tying up loose ends at work that they haven’t spent much time - if any - thinking about what retirement means to them or what they’ll plan to do in retirement. This is especially critical if your career has been a large part of your identity. 

Taking time to understand what your change in work status means to you on an emotional level is an important first step. This can include proactively investing in personal relationships and creating new connections outside the office to ensure you have a strong network separate from work. Additionally, it can be helpful to acknowledge that you are about to experience a considerable amount of change and it is normal to feel overwhelmed. 

A key part of moving through this overwhelm is having a plan in place, including how you wish to spend your time in retirement. Are you interested in traveling more? Volunteering? Spending more time with your children and grandchildren? Taking up a new hobby? Investing more time and energy into your health and wellness? Many studies show that retirees who stay physically, mentally, and socially active lead happier retirements. Having a general idea of how you’ll plan to spend your time can help you navigate the transition with less stress and a greater sense of purpose and enjoyment.  

Next, make sure you’ve created a monthly budget during retirement - and, don’t assume you’ll spend less just because you’re no longer working 

Your monthly budget will depend on your goals and aspirations for retirement. For example, if one of the primary ways you want to spend your time during retirement is traveling, you may actually end up spending more during retirement than you did while working. 

To start creating your monthly retirement budget, list out all of your current living expenses. This includes everything from mortgage payments, outstanding loans, current living expenses, college tuition payments, donations, healthcare costs, dining, entertainment, home repair, transportation, travel, gifts, and everything else. Something often overlooked is long-term care insurance, so make a point to factor that into your expense planning.

Now that you’re clear on your expenses, compare these against your anticipated monthly income. Take into account all sources, including retirement accounts, investments, cash deposits, and cash accounts, fixed income sources (Social Security, Pension), real estate, etc. 

Once you have a sense of your expenses and the lifestyle you wish to maintain in retirement, our team can partner with you to build a retirement transition plan to support your goals. We’ll also partner with your other advisors to take into account important factors such as the optimal tax strategy as you move into retirement and any changes you’d like to make to your estate plan.  

Have a plan to make your money last longer

Another concern for many heading into retirement is the fear of running out of money. This is understandable given the many unknowns - lifespan, your personal care needs, and inflation. However, there are a few considerations to help protect your purchasing power as you transition into retirement.

The first is to not shy away from moderate investment risk. A natural reaction during retirement is to want to protect everything you’ve earned - we agree that is of utmost importance. However, it is also important to continue to make your money work for you. We’ll partner with you to find the optimal investment strategy that offers the right balance of risk and earnings potential based on your unique goals. Through a diversified strategy, we can work to curb longevity risk and the effects of inflation. 

Another option is to consider delaying your Social Security benefits until the age of 70. Delaying Social Security withdrawals until the age of 70 can increase the Social Security payout by 32% (compared to withdrawing at your full retirement age). Alternatively, if you take Social Security at age 62, you will experience a 29.17% reduction in your full retirement age payout.

While retirement can be overwhelming, it also has the potential to be extremely rewarding. If you’re currently contemplating your own retirement, don’t hesitate to reach out. Our team is available to help you prepare for and successfully navigate your transition in a way that supports a life well balanced. Simply contact your Entrust Wealth Partners advisor or call us at (860) 838-3730 to get started today.