How Can You Plan a Happy and Wealthy Retirement Without Running Out of Money?

What Are the Best Retirement Planning Strategies for Financial Security and Fulfillment?

Discover 20 expert-backed retirement lessons from Christine Benz’s “How to Retire” that help you maximize Social Security benefits, create sustainable cash flow, manage asset allocation, and find purpose beyond work. Learn actionable strategies for financial security, tax planning, health care preparation, and building meaningful relationships in your golden years. Start planning your ideal retirement today with proven methods that balance wealth management with personal fulfillment.

Ready to transform your retirement from a financial calculation into a life of purpose and security? Dive into these expert strategies that will help you build the retirement you’ve always envisioned—because your golden years deserve more than just careful budgeting; they deserve intentional living.

Recommendation

Are you ready to turn your retirement dreams into reality? Author and investment expert Christine Benz draws on her interviews with a host of retirement thought leaders to provide the ultimate guide to navigating the financial and emotional challenges of retirement with ease. Packed with actionable strategies, her book helps you create a solid plan for financial security and find purpose and fulfillment in your golden years. Get ready to retire smarter, happier, and on your own terms with this essential compendium of retirement-related wisdom.

Take-Aways

• Visualize how you want to spend your retirement time, start mentally preparing, and bolster your relationships.
• Get the most out of Social Security and anticipate changes in your spending.
• Make a budget and put your money toward what makes you happy.
• Determine your income style, manage your asset allocation, and invest simply.
• Create ongoing cash flow and choose where you live wisely.
• Focus on what you can control and be open to adapting, as needed.
• Make a long-term plan for taxes and your health.
• Communicate your retirement and estate plans to loved ones and live without regrets.

Summary

Visualize how you want to spend your retirement time, start mentally preparing, and bolster your relationships.

People often focus too much on the financial preparation aspect of retirement without thinking much about how to spend their post-work time meaningfully. Without structure or purpose, extended leisure can feel unfulfilling and lead to a sense of aimlessness. To avoid this eventuality, build skills and habits before retirement that allow you to stay engaged in hobbies, volunteer work, or learning new things post-retirement. Rather than just embarking on a bucket list of trips, for example, establish routines that bring daily satisfaction, punctuated by occasional exciting events and adventures.

“Give yourself time to see if you can find satisfaction in replacing those nonfinancial aspects that you’re missing [with] things other than work.” (Blogger Fritz Gilbert)

Mentally preparing for retirement involves more than just financial readiness; it requires anticipating the emotional and social changes that come with leaving the workforce. You might face feelings of uncertainty or a loss of purpose as your career winds down. Focus on exploring new avenues that give you a sense of fulfillment, like starting a passion project or getting involved in your community. Take time to experiment with different activities and resist the urge to immediately fill your time with work again.

Social relationships play a significant role in a happy retirement. They extend life expectancy by providing emotional support, a sense of purpose, and community. Focus on quality over quantity, building meaningful, close relationships in the lead-up to your retirement. For example, have a weekly dinner with a close friend or family member, deepening your relationship through meaningful conversation and shared experiences. You can also diversify your social network by engaging in activities with people of various age groups, joining clubs, or volunteering.

Get the most out of Social Security and anticipate changes in your spending.

Social Security allows you to earn credits through paying payroll taxes during your working years, with a minimum of 40 credits (around 10 years of work) needed to be eligible for benefits. The government determines the amount of Social Security money you receive based on your average lifetime earnings and the age at which you start claiming benefits. To maximize your Social Security, it’s often best to delay claiming payouts beyond your full retirement age (66-67), as you can earn an 8% increase in benefits for each year you wait, until age 70. For example, if you delay your benefits claim until age 70, you could receive 24% more each month once your payouts commence, which can be especially beneficial if you live beyond the average life expectancy.

“If you look at how average spending evolves over time, for younger retirees, especially those entering their 70s, it tends to decline in today’s dollars.” (Researcher David Blanchett)

Bear in mind that when you retire, your spending patterns often change. People’s early retirement years typically involve higher expenses due to travel and extra spending on hobbies and lifestyle activities. However, as people age, spending on leisure tends to decrease. As you grow older and less physically adept, you’ll likely find that you’ll engage in fewer costly activities. However, your health-related expenses may rise later in life. So, plan for higher early spending while budgeting for potential health care costs later. Guaranteed income, such as Social Security or annuities, can help cover essential expenses and maintain financial stability throughout retirement.

Make a budget and put your money toward what makes you happy.

A spending plan is crucial for retirement because it helps you confidently manage your financial needs and avoid running out of money. Using software to track and categorize your spending will help you see where your money goes over time. Another option is to use a simple budgeting spreadsheet, breaking your expenses into categories like housing, food, and entertainment. Reviewing six to 12 months of your bank statements can also help you calculate your spending, adjusting for one-time or unusual expenses. This information will allow you to craft a budget by giving a realistic view of your regular, long-term financial needs.

“[Spend] on what gives you joy versus what everybody else is spending on.”

When deciding how to spend your retirement savings, prioritize what brings you joy and aligns with your values. Give yourself permission to enjoy your money without guilt. Focus on what enhances your life — experiences, hobbies, or even specific items you value — and don’t give in to societal pressure to deem certain expenses “frivolous.” Create a “worry-free number” for smaller purchases so you don’t overthink spending below a certain threshold. Also, plan spending on larger, aspirational goals, like travel or learning new skills, by making a five-year bucket list.

Determine your income style, manage your asset allocation, and invest simply.

Defining your retirement income style helps you create a financial plan that aligns with your comfort level and long-term goals. A “probability-based” approach relies on market investments and assumes that stocks will outperform bonds over time, allowing for a potentially higher standard of living. A “safety-first” approach prioritizes guaranteed income like Social Security, pensions, or annuities to ensure you can always cover core expenses.

“There’s no single best style for generating income in retirement.”

Your financial goals, risk tolerance, and time horizon will help you determine how to divide your retirement portfolio across different asset classes, like stocks, bonds, and cash. Diversification allows you to balance risk with returns, ensuring your portfolio meets your spending needs throughout retirement. Consider your spending rate (higher spending might require a more conservative approach), your age (younger retirees may need to focus on growth), and your comfort with risk (whether you prioritize safety or potential market gains).

Keep your retirement investments simple, using a combination of broad-based index funds and bond funds to maintain consistency in your financial plan as you age. Sticking to a simple strategy of two or three funds — holding a total stock market index fund for growth and a bond market fund for stability, for instance — eliminates the need for frequent monitoring and decision-making, which becomes more challenging with age.

Create ongoing cash flow and choose where you live wisely.

Using the bucket approach to retirement can ensure an ongoing cash flow. This strategy involves dividing your retirement portfolio into different “buckets” based on time horizon and risk tolerance. Typically, you want three buckets: the first holds cash or very liquid assets to cover a few years of immediate expenses; the second contains intermediate-term bonds that will mature over the next five to ten years; and the third holds growth assets like stocks for long-term needs. If stocks and bonds perform poorly during a period, you can draw from your liquid bucket, maintaining stability and peace of mind.

“The goal of the cash is to provide cash flows for the rare market environment when neither stocks nor bonds perform well.”

Consider how your housing will meet your future needs. As you age, you may face physical limitations or health issues that make it harder to live independently. So, aim for a home that not only meets your current comfort needs but can also accommodate more limited mobility, like one without stairs and wheelchair accessibility. It’s also important to ensure that your home remains affordable, considering factors like mortgage payments, taxes, and potential future repairs.

Focus on what you can control and be open to adapting, as needed.

As you approach retirement, focus on what you can control — like your spending, investment strategy, and goals — to reduce stress and improve your overall financial and emotional well-being. A solid retirement plan can withstand unexpected events, like market downturns or health issues while giving you confidence and peace of mind. Creating a vision for your retirement involves defining how you want to spend your time — whether it’s traveling, volunteering, or enjoying hobbies — and discussing these goals with your partner or family to ensure alignment.

“These are the aspects of retirement that we don’t necessarily look forward to, but they’re worth thinking through in advance to take the emotions out of the decision-making.”

Staying adaptable in retirement can be challenging because it often involves letting go of longstanding habits and mindsets, like saving diligently and avoiding spending from your investments. Adjust your financial and lifestyle strategies as new circumstances arise, like changes in health, finances, or personal goals. Plan ahead and create a flexible, phased approach to retirement. For example, start by gradually reducing your work hours and practice spending from your retirement accounts before fully retiring. This approach helps ease the psychological shift from saving to spending and allows you to navigate the unpredictable nature of retirement life better.

Make a long-term plan for taxes and your health.

Your taxes will likely change during retirement as you shift from earning a salary to withdrawing from your retirement accounts. Plan for taxes over your lifetime rather than trying to minimize them year by year by prepaying some taxes strategically, such as doing Roth conversions when you’re in a lower tax bracket. By spreading out tax payments over time, you can potentially reduce your overall tax burden. Collaborating with a tax professional, such as a certified financial planner or a tax attorney, can help you create a tailored tax strategy that adjusts to your evolving financial situation, providing better financial outcomes and greater peace of mind during retirement.

“I always tell people you want to be on the ‘live long, die quickly’ plan.” (Physician Carolyn McClanahan)

When planning for your health in retirement, focus on both your current habits and your future health care needs. While it’s never too late to improve your health, plan based on your realistic habits and health conditions; if you’re unlikely to change certain unhealthy behaviors, acknowledge that and plan for potential health care costs sooner. Having a trusted primary care physician who understands your health values is crucial, as they can help navigate the complexities of aging and medical care. Planning proactively allows you to handle health care challenges more effectively and maintain your quality of life as you age.

Retirement presents unique challenges for women, primarily due to factors like the gender wage gap, career breaks for caregiving, and longer life expectancies. Women should prioritize saving and investing strategically to compensate for lower lifetime earnings and retirement contributions. For example, maximizing contributions to retirement accounts and delaying Social Security can help bolster financial security. Additionally, women should consider the cost of long-term care and explore insurance options for added peace of mind.

Communicate your retirement and estate plans to loved ones and live without regrets.

Communicating your retirement plans and end-of-life wishes to your loved ones is important to avoid confusion and stress during critical moments. By sharing essential information — such as who will manage your finances if you are incapacitated, your health care preferences, and how you want your assets distributed — you ensure that your desires are honored and reduce the emotional and logistical burden on your family. Though it may feel uncomfortable, discussing topics like burial preferences or financial power of attorney can ultimately bring peace of mind to everyone involved.

Estate planning ensures that loved ones follow your wishes if you become incapacitated and after your death. The basics include three primary documents: a health care power of attorney and living will to manage your medical care decisions; a financial power of attorney to handle your financial matters; and a last will and testament to dictate how you wish to distribute your assets and who will be in charge. Ensure that your will aligns with your beneficiary designations. If your will designates one person but your beneficiary lists another, the beneficiary designation will be followed, which can lead to unintended outcomes like disinheriting children. Structuring your estate plan with these basics and leveraging additional tools, like trusts, if necessary, can help avoid complications for your loved ones.

“People don’t regret trying things and failing at them; they regret never trying.”

To leave this life without regrets and feel fulfilled when you die, focus on pursuing what brings you meaning and purpose. Don’t avoid challenges due to fear of failure. Many people look back and regret not following their passions. Be like the man who left his corporate career temporarily to climb Mount Everest. Even though he didn’t reach the summit, he found the experience fulfilling. The key to feeling content in life is not achieving every goal perfectly but having the courage to try.

About the Author

Author Christine Benz is director of personal finance and retirement planning for Morningstar and senior columnist for Morningstar.com.