What this article covers
Opher Ganel, a near-retiree himself, teams up with financial advisors and personal finance writers to share their best money and life tips for people in their 60s and 70s who plan to retire soon. Their common thread: ease into retirement gradually, keep doing something meaningful (ideally something that still earns some income), budget for inflation and taxes, and have estate planning, a trusted team of professionals and your spouse on board before you stop working.
Key Takeaways
Phasing into retirement gradually beats going from full-time work to fully retired overnight
Opher Ganel plans to cut back to half-time for a few years, then to 25%, which lets him start enjoying more free time sooner, reduces sequence-of-returns risk and gives him time to figure out what he wants to do. One advisor interviewed said clients who slowly wade into retirement have a much better transition, calling retirement a learned skill that takes time and new tools.
Purpose and some ongoing income can make retirement both happier and more affordable
Finding something you enjoy that brings in at least some money keeps you active, reduces the portfolio you need and can increase what you spend or leave to heirs and charity. Advisors and writers interviewed agreed that having purpose is paramount and that retirement doesn’t have to mean empty days between bridge club and golf.
Near-retirees should budget for inflation and taxes, avoid big early purchases and get expert help
Advisors interviewed urged retirees to map out expenses (housing, travel, debt) including inflation and taxes, prepare for worst cases like a market downturn or health setback, and avoid large purchases early in retirement that rob the portfolio of future compounding. They also recommend a team for taxes, estate planning and Medicare coverage, and getting on the same page with your spouse.
Deborah Meyer
Nick CovyeauI think I qualify as a near-retiree.
Frankly, I could afford to stop working now if we were willing to give up our dream home and move back to our previous house (that we still own and are leasing out). But unless forced into doing so, why would we?
So, what are my planning ideas as I get closer to retiring? Let’s dive in and learn what I’m doing, along with tips from others who have been thinking about this topic.
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What Should You Do Before You Retire? 5 Money and Life Tips
Not wanting to limit this to my own ideas, I asked financial professionals on Wealthtender and top finance writers on Medium for their best tips for people in their 60s and 70s, who are hopefully about to retire (or already retired if they were savvy and a bit lucky).
Here’s what we came up with between us.
Tip 1: Ease Into Retirement Gradually Instead of Stopping Work All at Once
I’ll start with my own contribution based on how I plan to do things.
If you’re still working and want to retire soon, try easing into it by reducing your work from full-time to half-time for a few years, then down to 25% for a few more years. Then, keep it at that level or stop altogether, as you prefer.
Deborah Meyer, CFP®, CPA/PFS, CEPA, CEO of WorthyNest® says:
Create space to envision your post-retirement life before turning in your notice or exiting the business. Mitch Anthony’s book ‘The New Retirementality’ does an excellent job of helping near-retirees not only consider the financial implications of retirement but, more importantly, the emotional and social aspects. Retirement can feel isolating and lonely if you don’t surround yourself with other energetic people who find their purpose outside of work.
This offers three major benefits:
- It lets you start the shift to less work and more play sooner than if you hold out for going from full-time to fully retired at once.
- It reduces your portfolio sequence-of-returns risk, where having a market crash early in your retirement forces you to eat into your portfolio’s capital, greatly increasing your risk of running out of money.
- It lets you gradually figure out what you want to do during retirement, so you don’t suddenly realize you’re totally bored and just waiting to die.
Nick Covyeau, CFP®, Owner and Financial Planner at Swell Financial, shares:
What I’ve seen with my clients is that those who slowly wade into retirement by gradually decreasing their work have a much better transition than those who go from full-time work to full retirement, dropping everything. Retirement is a learned skill. It’s something you must train yourself how to do. It takes time, patience, and a new set of tools than the previous chapter of your life/career.
Danielle Miura, CFP®, founder and owner of Spark Financials, adds:
Even the most detailed plans don’t always work out. Before you retire, prepare for possible worst-case scenarios: a market downturn or a health setback.
Tip 2: Find Something You Enjoy That Still Brings In Some Income
My second tip is to find something you enjoy doing, that you can do for a long time, and that brings in at least some money. This will keep you active, reduce the size portfolio you need, and/or increase how much you can spend in retirement, and/or let you leave a larger bequest to your kids or a favorite charity.
Joe Dunat, Wealth Advisor at Sturkie Wealth Management agrees:
Having a purpose is paramount. Find something that will continue to give meaning and routine.
Tip 3: Plan Retirement Income and a Budget That Covers Inflation and Taxes
Jason Clenenden’s advice is, “Hopefully, you’re in good shape by now and ready to enjoy the fruits of your labor. Focus on investments that generate income so you don’t have to sell assets to survive. If you aren’t in good financial shape, you may have to continue working in some form or fashion to support your investment income until it can support you.”
Miura adds that you need to budget but cautions to not forget inflation and taxes. She says:
Determine what your expenses will look like for your retirement. Will you be downsizing your home? How much will you be spending on traveling? Will you be debt-free before retirement? Don’t forget to include inflation and taxes in your calculation.
Covyeau suggests:
Avoid making big purchases early in retirement. Such purchases will rob your account of future compounded interest and leave a lasting negative impact on the rest of your retirement.
Tip 4: Enjoy Retirement, but Finish Your Estate Plan and Build a Trusted Team
Ben Le Fort says, “Assuming you’re financially independent at this point, focus on the things and people that make you happy. You’ve already done the work, now enjoy yourself. The obvious caveat would be to complete your estate planning.”
Dunat adds tax, financial, insurance, and medical support to the role of estate planning, “Have a trusted team of professionals in your corner for the larger decisions in your life. Navigate the tax consequences of any retirement withdrawal strategies with a tax professional and financial planner. Have a plan for your next of kin to make sure your estate doesn’t get held up in probate by working with an estate attorney.
As you transition to Medicare, have a health insurance agent who can make sure your doctor (and any medications) will be covered under your plan. The happiest retirees we know do not try to make these decisions on their own, they have a person in their corner.
Tip 5: Keep Doing Meaningful Work So Retirement Doesn’t Leave You Bored
Wrapping up, Charlie Brown reinforces my first tip, sharing from the experience of family members, “Going from full-time employment to retirement (if you’ve not gone down a financial freedom route earlier in life) sucks. I’ve seen it happen with members of my family, and it isn’t pretty.”
She continues, “Retirement doesn’t have to mean bridge club every Tuesday and golf every Friday with nothing to fill the gaps in between. You can still engage in meaningful work and get a lot out of it, whatever age you are.”
The Bottom Line: Stay Engaged, Plan Ahead and Retire Together
Without any coordination, all of us suggest in one form or another that near-retirees consider finding something they enjoy doing to continue doing even after “retiring.” This will help you feel productive and engaged rather than simply passing the days and years until you die.
We all encourage you to fill your “golden years,” with whatever you enjoy doing, spending time with family and friends.
If your situation requires it, keep working at least while you can in order to “support your investment income until it can support you,” in Jason’s words.
As a bonus tip, Covyeau points out the importance of being on the same page as your spouse. He says:
You’re in this together. Learning how to retire together is a fun and exciting adventure that will take time. You’re going to find yourself with more time on your hands, wrestling through potential loss of identity through no longer working, and maybe in a new physical location after moving. All these massive changes are going to take time to adjust to and odds are, you and your spouse may process them at different speeds. Retirement is a major shift, and it’s important to work through this transition well with your spouse before and during retirement. It’s important to be flexible, communicative, and adaptable as getting comfortable in retirement together is going to take some time to get used to. Have fun with it. Be creative and make it your own.
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Frequently Asked Questions
What is the best way to transition into retirement?
Opher Ganel recommends easing into it: reduce work from full-time to half-time for a few years, then to 25% for a few more, and keep it there or stop as you prefer. An advisor interviewed said clients who gradually decrease their work have a much better transition than those who drop everything at once.
How does working part-time before retiring reduce risk?
Continuing to earn some income reduces sequence-of-returns risk, where a market crash early in retirement forces you to eat into your portfolio’s capital and greatly increases the risk of running out of money. It also reduces the size of the portfolio you need.
What should near-retirees include in a retirement budget?
Advisors interviewed suggest estimating what your expenses will look like in retirement, including whether you will downsize, how much you will travel and whether you will be debt-free. They stress including inflation and taxes in the calculation and preparing for worst-case scenarios such as a market downturn or a health setback.
Should you make big purchases right after you retire?
One advisor interviewed recommends avoiding big purchases early in retirement. Such purchases rob your account of future compounded growth and can leave a lasting negative impact on the rest of your retirement.
What professionals should you have on your team before retiring?
One advisor interviewed recommends a financial planner and a tax professional to navigate withdrawal strategies, an estate attorney so your estate doesn’t get held up in probate, and a health insurance agent to confirm your doctors and medications are covered as you transition to Medicare. The happiest retirees, he says, don’t make these decisions on their own.
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Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.
About the author
Contributing Writer, Wealthtender
My career has taken some unexpected turns, from earning a PhD in experimental high-energy physics, to conducting cosmic-ray research in Antarctica, to supporting NASA projects and programs, to running my own consulting business. I also run several other small businesses and help my wife run her Marriage and Family Therapy practice.
Those experiences taught me to question assumptions, think critically, and recognize that real-world decisions of any significance rarely have simple answers that apply to everyone. Today, I bring that perspective to writing about personal finance. Drawing on my analytical background, business experience, and research, I explore financial decisions, challenge conventional wisdom, and help readers understand the tradeoffs that can affect their financial well-being. To complement my own research and experience, I also weave insights from financial professionals into my articles, drawing on their expertise and real-world experience helping clients navigate financial decisions and challenges.
At medium.com/@opher-ganel, you can read more of my articles and subscribe to receive email notifications when new ones come out.