Transitioning into Retirement (2022)

If you’re considering retirement within the next five years or so, you’re in the retirement “zone.” This is a critical time period during which you’ll be faced with a number of important choices, and the decisions you make can have long-lasting consequences. It’s a period of transition: a shift from a mindset that’s focused on accumulating assets for retirement to one that’s focused on distributing wealth and drawing down resources. It can be confusing and chaotic, but it doesn’t have to be. The key is to understand the underlying issues, and to recognize the long-term effects of the decisions you make today.

Tip: If you’ve recently retired, you’re also in the retirement zone. You’ll want to evaluate your financial situation in light of the decisions that you’ve already made, and consider adjusting your overall plan to reflect your current expectations and circumstances.

Are you ready to retire?
The first question that you should ask yourself is: “Am I ready to retire?” For many, the question isn’t as easy to answer as it might seem. That’s because it needs to be considered on two levels. The first, and probably the most obvious, is the financial side. Can you afford to retire? More specifically, can you afford the retirement you want? On another level, though, the question relates to the emotional issues surrounding retirement--how prepared are you for this new phase of your life? Consider both the financial and emotional aspects of retirement carefully; retiring before you’re ready can put a strain on the best-devised retirement plan.

Financial issues - Start with the Basics:

• If you do not already have a projection of the annual income you’ll need in retirement, spend the time now to develop one. Factor in anticipated costs relating to basic needs, housing, health care, and long-term care. If you plan to travel in retirement, estimate a corresponding annual dollar amount. If you’re financially responsible for other family members, or plan to make monetary gifts, you’ll want to include these commitments in your calculations. Be as specific as you can. If it’s been more than a year since you’ve done this exercise, revisit your numbers. Consider and account for inflation.

• Estimate the income that you’ll be able to rely on from Social Security and any benefits from a traditional employer pension, and compare the result with your projected retirement income need. The difference may need to be funded through your personal savings and/or work in retirement.

• Take stock of your personal savings. Are your personal savings sufficient to provide you with the annual income that you’ll need?

• When will you retire? The age at which you retire can have an enormous impact on your overall retirement income situation, so you’ll want to make sure you’ve considered your decision from every angle. Why does the timing of your retirement make such a difference? The earlier you retire, the sooner you need to start drawing on your retirement savings. You’re also giving up what could be prime earning years, when you could be making substantial additions to your retirement savings. That combination, even for just a few years, can make a tremendous difference.

(Video) The Psychology Of Retirement: Transitioning Effectively

Other factors to consider
• The longer the retirement period that you need to plan for, the greater the potential that inflation will eat away at your purchasing power. That means the earlier you retire, the more important it is to account for inflation in your overall plan.

• You can begin receiving Social Security retirement benefits as early as age 62. However, your benefit may be as much as 20 to 30 percent less than if you waited until full retirement age (65 to 67, depending on the year you were born). Weigh your options, and choose the start date that makes the most sense for your individual financial circumstances.

(Video) Transitioning Into Retirement

• If you’re covered by a traditional employer pension plan, check to make sure it won’t be negatively affected by your early retirement. Because the greatest accrual of benefits generally occurs during the final years of employment, it’s possible that early retirement could effectively reduce the benefits you receive. Make sure that you understand how the plan calculates benefits and any payout options under the plan.

• If you plan to start using your 401(k) or traditional IRA savings before you turn 59½ (55 in the case of a 401(k)), you may have to pay a 10 percent early distribution penalty tax in addition to any regular income taxes (with some exceptions, this includes payments made due to disability). Consider as well the order in which you’ll tap your personal savings during retirement. For example, you might consider withdrawing from
tax-advantaged accounts like IRAs and 401(k)s last. If you postpone retirement beyond age 70½, you’ll need to begin taking required minimum distributions from any traditional IRAs and employer-sponsored retirement plans (other than your current employer’s retirement plan), even if you do not need the funds.

• You’re not eligible for Medicare until you turn 65. Unless you’ll be eligible for retiree health benefits through your employer (or have coverage through your spouse’s plan), or you take another job that offers health insurance, you’ll need to calculate the cost of paying for insurance or health care out-of-pocket, at least until you can receive Medicare coverage.

Non-financial issues
When it comes to retirement, it’s easy to focus on the financial aspects of your decision to the exclusion of all other issues. After all, we’ve spent much of our lives saving for retirement, and for many of us, the retirement lifestyle we hope to enjoy depends primarily on the wealth that we’ve accumulated during our working years. But, there are a number of non-financial issues and concerns that are just as important. Fundamentally, your retirement income plan is just a means to an end: having the ability to do the things you want to do in retirement, for as long as you want to do them. But that presupposes that you know what it is you want to do in retirement. Many of us have never thought beyond the vague notion we’ve held during most of our working lives: that retirement--if properly planned for--will be something of an extended vacation, a reward for a lifetime of hard work. Retirement may be just that for the first few weeks or months. The fact is, though, that your job likely demanded your attention for a majority of your waking hours. No longer having that job leaves you with a lot of free time to fill. Just as you have a financial plan when it comes to your retirement, you should consider the type of lifestyle you want and expect from retirement as well.

What do you want to do in retirement? Do you intend to travel? Pursue a hobby? Give some real thought to how you’re going to spend a typical week, and consider actually writing down a hypothetical schedule. If you haven’t already, consider:

Volunteering your time -- You can provide a valuable service to the community, working voluntarily in retirement, while sharing your unique skills and interests. Hospitals, community centers, day-care centers, and tutoring programs are just a few of the places where you could make a difference.

Going to school -- Retirement can be the perfect time to pursue a degree, advance your knowledge in your current field or in a new field, or just take classes that interest you. In fact, many institutions offer special rates and programs for retirees.

Starting a new career or business -- Retirement can be the perfect opportunity to try something different. If you’ve ever dreamed of starting your own business, now may be your chance.

(Video) The 4 phases of retirement | Dr. Riley Moynes | TEDxSurrey

Having concrete plans can also help overcome problems commonly experienced by those who transition into retirement without thinking ahead:

Loss of identity -- Many people identify themselves by their professions. Affirmation and self-worth may have come from the success that you’ve had in your career, and giving up that career can be disconcerting on a number of levels.

Loss of structure -- Your job provides a certain structure to your life. You may also have work relationships that are important to you. Without something to fill the void, you may find yourself needing to address unmet emotional needs.

Fear of mortality -- Rather than a “new beginning,” some see the “beginning of the end.” This can be exacerbated by the mental shift that accompanies the transition from accumulating assets to drawing down wealth.

(Video) Transition To Retiring - A Retirement Strategy

Marital discord -- If you’re married, consider whether your spouse is as ready as you are for you to retire. Does he or she share your ideas of how you want to spend your retirement? Many married couples find the first few years of retirement a period of rough transition. If you haven’t discussed your plans with your spouse, you should do so; think through what the repercussions will be — both positive and negative — on your roles and relationship.

Working in retirement
Many individuals choose to work in retirement for both financial and non-financial reasons. The obvious advantage of working during retirement is that you’ll be earning money and relying less on your retirement savings — leaving more to potentially grow for the future, and helping your savings last longer. But many retirees also work for personal fulfillment — to stay mentally and physically active, to enjoy the social benefits of working, or to try their hand at something new. If you are thinking of working during your retirement, you’ll want to make sure that you understand how your continued employment will affect other aspects of your retirement. For example:

• If you continue to work, will you have access to affordable health care through your employer? If so, this could be an incredibly valuable benefit.

• Will working in retirement allow you to delay receiving Social Security retirement benefits? If so, your annual benefit when you begin receiving benefits may be higher.

• If you’ll be receiving Social Security benefits while working, how will your work income affect the amount of Social Security benefits that you receive? Additional earnings can increase benefits in future years. However, for years before you reach full retirement age, $1 in benefits will generally be withheld for every $2 you earn over the annual earnings limit ($15,720 in 2015). Special rules apply in the year that you reach full retirement age.

Tip: Some employer pension plan programs allow for “phased retirement.” These programs allow you to continue to work on a part-time basis while accessing all or part of your pension benefit. Federal law encourages these phased retirement programs by allowing pension plans to start paying benefits once you reach age 62, even if you’re still working and haven’t yet reached the plan’s normal retirement age.

Caution: Many people who count on working in retirement find that health problems or job loss prevents them from doing so. When making your retirement plans, it may be wise to consider a fallback plan in case everything doesn’t go as you expect.

(Video) How to Successfully Transition Into Retirement


How do I ensure I have enough retirement? ›

10 tips to help you boost your retirement savings — whatever your age
  1. Focus on starting today. ...
  2. Contribute to your 401(k) account. ...
  3. Meet your employer's match. ...
  4. Open an IRA. ...
  5. Take advantage of catch-up contributions if you're age 50 or older. ...
  6. Automate your savings. ...
  7. Rein in spending. ...
  8. Set a goal.

What are the five emotional stages of retirement? ›

Here are five stages you can expect to encounter and suggestions for ways you can help to prepare yourself.
  • Realisation. When your retirement date arrives and you're ready to realise your retirement plan, you're likely to feel mixed emotions. ...
  • Honeymoon period. ...
  • Disenchantment. ...
  • Reorientation. ...
  • Stability.

What are some good retirement quotes? ›

30 Retirement Quotes
  • “The trouble with retirement is that you never get a day off.” – Abe Lemons.
  • “There's never enough time to do all the nothing you want.” – Bill Waterson, Calvin & Hobbes.
  • “Retirement is like a long vacation in Las Vegas. ...
  • “It is better to live rich than to die rich.” – Samuel Johnson.
26 May 2022

What is transition to retirement example? ›

An example of a Transition to Retirement (TTR) Pension is simple. A TTR pension is commenced with some or all of your superannuation balance while you are still working and you are required to draw an income of between 4% and 10% of the account balance, as calculated on 1 July of each year.

What is a good monthly retirement income? ›

A good retirement income is about 80% of your pre-retirement income before leaving the workforce. For example, if your pre-retirement income is $5,000 you should aim to have a $4,000 retirement income.

What does the average person need to retire on? ›

But, generally speaking, most experts agree that you will need 70-80% of your pre-retirement income to maintain your standard of living in retirement. For example, if you earned $50,000 per year ($4,167 a month) before retiring, you would need approximately $35,000-$40,000 per year in retirement.

What is the average retirement income in 2022? ›

Average Household Retirement Income 2022:

Median Income – $46,360 (down from $56,632 in 2019) Mean Income – $71,446 (down from $84,153 in 2019)

What do you do all day when you retire? ›

23 Fun Things to Do in Retirement
  • Travel. Satisfy your wanderlust! ...
  • Get an education. ...
  • Indulge in a hobby (or three) ...
  • Donate your time. ...
  • Get involved in a sport. ...
  • Set new fitness goals. ...
  • Mentor others. ...
  • Join (or start) a club.
22 Apr 2022

What are the 4 pillars of retirement? ›

The four pillars of the new retirement are health, family, purpose, and finances. They are inextricably interconnected, and each is essential to thrive in the new retirement. The new retirement is becoming an exciting and fulfilling stage of life—with new choices, new freedoms, and new challenges.

What retirees do all day? ›

The study showed that those in retirement spent less time on things like working, educational activities, and caring for others like their children. They spent more time on things like personal care, eating, household activities, shopping, leisure, civic activities and talking on the phone.

What should I say in my retirement speech? ›

What Makes A Good Retirement Speech?
  • Talk about how you started your career in the organisation and grew over the years.
  • Share experiences of working with people.
  • Talk about opportunities, obstacles and lessons you learnt.
  • Share something that makes you proud.
  • Speak about something that you may miss.

What do you write in a retirement message? ›

Heartfelt Retirement Messages
  1. We wouldn't be where we are today without you. Thanks for everything.
  2. The office won't be the same without you! ...
  3. Wishing you happiness beyond retirement. ...
  4. Thank you for being a mentor, friend and one of the hardest workers I know. ...
  5. I cannot imagine the past [X] years without you.

How do I write a goodbye retirement speech? ›

I express my special thanks to all of you and wish that you continue to be successful in your life. There is a lot of learning ahead of you, so be focused and persistent, and you will be successful in your future endeavors. Thank you very much.

What are the 3 goals of retirement? ›

Some common retirement goals include: Set a retirement budget. Plan a milestone event. Prioritize wellness.

What is the 90 10 Rule of retirement? ›

The 90/10 investing strategy for retirement savings involves allocating 90% of one's investment capital in low-cost S&P 500 index funds and the remaining 10% in short-term government bonds.

Can you work full-time and transition to retirement? ›

In fact, the transition to retirement rules actually allow you to continue working full-time and, by salary sacrificing, access your TTR income stream and take advantage of the greater tax benefits.

What is the healthiest age to retire? ›

As a general rule, early retirement leads to a longer and happier life. The optimal age is your mid 50's, when you're still young and healthy enough to enjoy everything.

Are early retirees happier? ›

Generally, people who have retired early said they were happier, had better relationships with family and friends, and had improved mental and physical wellbeing. However, 47% of early retirees said their finances had worsened.

Is there a downside to retiring early? ›

Cons of retiring early include the strain on savings, due to increased expenses and smaller Social Security benefits, and a depressing effect on mental health. There may be ways to chart a middle course—cutting back on work without fully retiring.

Can you live on 3000 a month in retirement? ›

Whether you want to retire in a big city or a small town, you can live comfortably in some places for $3,000 a month or less.

How much does the average retiree live on per year? ›

Average Retirement Income in 2021. According to U.S. Census Bureau data, the median average retirement income for retirees 65 and older is $47,357. The average mean retirement income is $73,228.

How much do 2 people need to retire comfortably? ›

If you want a comfortable retirement, you should aim for a monthly income of at least 70% of your pre-retirement income. So, if you and your spouse currently bring in a combined monthly income of $5000, you would need to have a retirement income of at least $3500 per month.

How much money do most people retire with? ›

On average, Americans have around $141,542 saved up for retirement, according to the “How America Saves 2022” report compiled by Vanguard, an investment firm that represents more than 30 million investors.

What is the average 401K balance for a 65 year old? ›

While the 401k is one of the best available retirement saving options for many people, just 41% of workers contribute to one, according to the U.S. Census Bureau.
Average 401k by Age (Vanguard)
5 more rows
7 Sept 2022

What is the average retirement savings at age 65? ›

Average savings: The average savings for those 55-65 is $197,322, and the average for those over 65 is $216,720. Your "official" retirement age is usually defined by when you're eligible to receive full Social Security benefits.

What percentage of retirees have a million dollars? ›

In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved. If you're looking to be in the minority but aren't sure how to get started on that savings goal, consider working with a financial advisor.

Is $6000 a month good for retirement? ›

With $6,000 a month, you have more money than the average retiree—Americans aged 65 and older generally spend roughly $4,000 a month—and therefore more options on where to live. Below, we list five spectacular places where you might consider spending your golden years.

Where can I retire on $3000 a month? ›

One of the biggest is where to live. GOBankingRates is here to help, giving you the best cities to retire on a monthly budget of $3,000 or less for a person 65 and older.
  • Forth Worth, Texas.
  • Jacksonville, Florida. ...
  • Phoenix, Arizona. ...
  • Mesa, Arizona. ...
  • Las Vegas, Nevada. ...
  • Reno, Nevada. ...
  • Virginia Beach, Virginia. ...
  • Boise, Idaho. ...
6 days ago

What is the first thing you should do after retire? ›

What Are Some of the Very First Things You Should Do When You Retire?
  • Move Somewhere New: Have you ever wanted to live in the country? ...
  • Travel the World: ...
  • Get a Rewarding Part-Time Job: ...
  • Give Yourself Time to Adjust to a Fixed Income: ...
  • Exercise More:

What do retirees do at night? ›

Retirees enjoy over seven hours of leisure time per day, according to 2019 data from the American Time Use Survey. They use their newfound free time in a variety of ways, including taking up new hobbies, relaxing at home, watching TV and lingering over daily activities. Many retirees also continue to work or volunteer.

What are the six stages of retirement? ›

Let's take a closer look at each of the six phases of retirement.
  • Pre-Retirement: Planning Time. ...
  • The Big Day: Smiles, Handshakes, and Farewells. ...
  • Honeymoon Phase: I'm Free! ...
  • Disenchantment: So This Is It? ...
  • Reorientation: Building a New Identity. ...
  • Routine: Moving On.

Where should I be financially at 55? ›

Experts say to have at least seven times your salary saved at age 55. That means if you make $55,000 a year, you should have at least $385,000 saved for retirement.

What is a fulfilling retirement? ›

Studies have shown that retirees who feel fulfilled focus on good habits in their daily life. These might include: Staying physically active and mentally healthy: It's essential to keep your body and mind in good shape during retirement by staying active.

What a retiree should not do? ›

Plan for healthcare costs in retirement, pay off debt and delay Social Security until age 70 to help maximize your benefits.
  • Quitting Your Job. ...
  • Not Saving Now. ...
  • Not Having a Financial Plan. ...
  • Not Maxing out a Company Match. ...
  • Investing Unwisely. ...
  • Not Rebalancing Your Portfolio. ...
  • Poor Tax Planning. ...
  • Cashing out Savings.

What time do most retirees wake up? ›

Retirees typically get up at 8.30am, giving them an additional one-and-a-half to two hours' sleep than their younger, still-in-work counterparts. Most over-60s do this daily, rising at the same time at weekends too, meaning every day is an opportunity for a lie-in.

Are retired people happier? ›

Early research on the relationship between retirement and happiness is derived from psychology, and mainly describes the relationship between retirement and happiness. These studies concluded that retirement is associated with lower life satisfaction, depression, and lower happiness (9, 10).

What do you say for a meaningful and inspirational retirement remarks? ›

Inspirational Retirement Quotes
  • The best part about retirement is spending time with the grandkids.
  • Retirement is the only time in your life when time no longer equals money.
  • Retire from your job, but never retire your mind.
  • My best days in retirement are when I give back to the community.
1 Nov 2019

What is a good retirement toast? ›

Here's to your health and your family's health. May you live long and prosper. May you have even more fun in retirement than we do here at work. Good luck with all the work you've been waiting to do since you joined us.

What to write to your coworkers when you retire? ›

What are the best examples of retirement wishes?
  • Your retirement just began. ...
  • It is not easy to say goodbye, But, I will hold on to the sweet memories of working with you. ...
  • Retirement is a time of self-reflection. ...
  • You have completed a successful career. ...
  • You are one of the best colleagues I have worked with.
27 Aug 2022

What are some good farewell sayings? ›

General Saying Goodbye Quotes
  • “They must often change, who would be constant in happiness or wisdom.” – ...
  • “Every new beginning comes from some other beginning's end.” – ...
  • “Farewell! ...
  • “It is so hard to leave—until you leave. ...
  • “If you're brave enough to say goodbye, life will reward you with a new hello.” –
23 Sept 2022

What should I say on my last day of work speech? ›

Any well wishes or hopes that you have for your coworkers. Your reasons for leaving the company and your plans. Fun anecdotes that detail special memories with your colleagues and the company. Aspects of the job that you are especially grateful for, including what you learned and the friends you made.

What do you say on your last day of work? ›

Above all, send out one last “goodbye and thank you!” email to the office on your last day of work. “Share that you are departing the company but remain positive about the company and enjoyed your professional experience there,” Manciagli says.

When should I start transitioning to retirement? ›

Once you reach age 65 or meet a condition of release, your account moves into 'retirement phase'.

When should I tell my boss I'm retiring? ›

4. Give at least six months of notice. Some employers require as little as 30 days of notice of intent to retire, but it's often a professional courtesy to announce your retirement as soon as you can.

What are the four stages of retirement? ›

  • Pre-Retirement (Ages 50 to 62 or So)
  • Early Period of Retirement (Ages 62 to 70)
  • Middle Retirement (Ages 70 to 80)
  • Late Retirement (80 and Up)
  • The Bottom Line.

What should you not do when you retire? ›

Plan for healthcare costs in retirement, pay off debt and delay Social Security until age 70 to help maximize your benefits.
  1. Quitting Your Job. ...
  2. Not Saving Now. ...
  3. Not Having a Financial Plan. ...
  4. Not Maxing out a Company Match. ...
  5. Investing Unwisely. ...
  6. Not Rebalancing Your Portfolio. ...
  7. Poor Tax Planning. ...
  8. Cashing out Savings.

What is a realistic age to retire? ›

66-67 – Depending on your year of birth, your Full Retirement Age (FRA) will be between 66 and 67. For example, if you were born in 1955, your FRA is 66 years and 2 months while if your birth year was 1959, your FRA is 66 years and 10 months.

Which is the best month to retire? ›

So as you can see there is a lot of Income Tax to be saved by choosing March as the month best to retire in. As a bonus there is also another good reason to retire at the end of the tax year. You will be going into spring so the weather should be warmer and the nights longer with more you can do!

What should I do on my last day of work before retirement? ›

Here is a list of actions to take on your final day at a company:
  • Collect all employee contacts. ...
  • Wipe personal information from your computer and phone. ...
  • Go to HR to hand over all company possessions. ...
  • Complete an exit interview if required. ...
  • Ask for a letter of recommendation from your manager. ...
  • Tidy up your workspace.

Can I be fired after announcing my retirement? ›

The short answer is yes, you can be fired after announcing your plans to retire. Most U.S. workers are considered "employed at will," which means they can be terminated at any time, with or without cause. Even so, employers typically prefer to let employees leave on their own accord after they announce they're leaving.

What is the biggest expense in retirement? ›

The biggest expense for most retirees is still housing. This expense category includes: Mortgage payments. Utilities.

What are the three legs of retirement? ›

Social Security benefits were said to be one leg of a three-legged stool consisting of Social Security, private pensions and savings and investment. The metaphor was intended to convey the idea that all three approaches were needed to provide stable income security in retirement.

What are the golden years of retirement? ›

Generally speaking, the golden years begin at age 65 and last until age 80 and beyond. However, some experts question whether “golden years” still belongs in our vocabulary because the time span and definition of retirement have changed over the past half-century. “Older Americans live longer now than they did in 1960.

What is the 80 rule for retirement? ›

What is the Rule of 80? This provision creates a so-called Rule of 80, a new definition of Normal Retirement for members of the Hybrid Defined Benefit Component. This allows members to claim a full, unreduced pension benefit if their combined age and years of service equal at least 80, beginning at age 50.


1. What is transition to retirement? (TTR) | Work less or save more
2. What is transition to retirement? How it works, pros & cons.
(Retire On)
3. Transitioning to Retirement Part 1 (5 to 10 years before retirement)
(Retirement Transformed)
4. What Federal Employees Can Expect When Transitioning into Retirement
(Advice Chaser)
5. What is a Transition to Retirement
(Talking Money with Pete)
6. Retirement Transition Lessons

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