We‘ve probably all have seen the ads focusing on knowing “your number” for retirement. But making the transition to retirement after decades of working is one of life’s major transitions. Money is certainly important, but there are other considerations as well. Don’t just stumble into retirement, go in with a plan.

Here are 6 items to consider before making the decision to retire:

1. Retire TO, NOT Retire From.

I know, you may be burnt out and ready to leave the responsibilities, headaches, and stress behind. However, people who transition successfully into retirement typically have a good idea of what their life will be like. They may not have it exactly accurate, however, are looking forward to some specific things and know what an ideal week looks like. Check out 5 Non-Financial Planning Tips for Retirement Happiness.

2. When to take Social Security?

Just because you can take Social Security at age 62 doesn’t mean you should. This is a very individualized decision and strategy. First, it starts with whether you are married, divorced or single. Other factors include your other income sources, your health and expected span of life given genetics, and your spouse’s possible longevity. Under current rules, your monthly Social Security benefit increases by about 8% each year.1 By waiting, the value of your monthly benefit goes up. That’s free money if you will. It’s a complex situation that a financial advisor can help you with.

3. Can you retire before age 59.5?

Many people target retirement at age 59.5, the age at which you can tap into your IRA and 401k monies without penalties. Again, just because you can doesn’t mean you should. A rule of thumb is that you should only take about 3% -3.5% annually from your portfolio to have your portfolio last 25 – 30 years. However, if you retire “young” you may need your money to last over 30 years.

4. Know your lifestyle and estimated expenses

Don’t assume that you will spend less in retirement. Our experience shows us that clients tend to spend roughly the same amount in the first decade or so of retirement, while they may spend less on work clothes and commuting expenses. However, they are more likely to spend on travel, eating out and other entertainment items while they are healthy. Track your expenses for a few years prior to retiring so you know what to expect.

5. Will your money last?

Beware of online retirement calculators or other similar products.

There are often several problems with these types of calculations:

a. Many of these calculators take your money to only age 85. However, it’s more and more likely that many of us will live well into our 90s. In fact, the fastest growing age cohort is the 100-year-olds!

b. Retirement Calculators may not include the implications of taxes. If the majority of your retirement assets are in qualified plans such as 401k and IRAs, you will be taxed at ordinary income tax rates for every dollar you pull out. This is hidden “gotcha” for many of us when we are told during our working years to take the tax deferral and defer taxes to later. Now the payment is coming due in retirement! In fact, at age 70.5, the government requires you to take a required Minimum Distribution each year based on a formula they have created.2

c. Taking a linear approach – the models calculate your assets growing X% every year, which doesn’t include various market scenarios – we know historically that markets have cycles, they go up and down. Your nest egg will go up and down and depending on WHEN that happens, it could have a severe effect on your ability to fund your life into your 90s.

6. How will you replace your paycheck?

We work with clients to set up a “paycheck” system whereby they pull from their portfolio to supplement other income sources (such as Social Security), in a tax efficient way. There is a positive emotion to having money come in monthly or quarterly that feels like the paycheck we got when working.

We haven’t even talked about the investment strategy and investment allocation that makes sense given your cash needs, your timeline, and risk tolerance.

We encourage you to work with a financial planner who can help you through this transition and continue to modify as your life changes. You don’t maintain your own car, or perform an operation on yourself, or sell your house without a realtor; why would you try to go through this without a professional to guide you? Take steps to avoid making irrevocable mistakes.


Photo by Marie-Sophie Tékian on Unsplash

Joni Lindquist, MBA, CFP®, is a Principal at Aspyre Wealth Partners, specializing in Financial Planning and Executive/Career Coaching. For help with your specific situation contact Joni Lindquist at, (913) 345-1881 or visit our website at We help successful people Master What’s Next® – whatever phase of life they are in.