7 Tips for a Successful Retirement

David L. Johanson |

You have saved and invested for decades and you are gearing up for retirement, or maybe you have already left your job.  While the idea of leaving your career behind may be appealing, it is a monumental change that can also be unsettling for some.

You will be sailing in a new direction, and you will take on new challenges.  Your daily routine will dramatically change, and you will begin to rely on a lifetime of savings.  What should you do to plan for success?  Here are our tips.

1. A more conservative investment posture may be in order.  There was little reason for concern when you were 30 years old, and volatility struck your aggressive portfolio.  In fact, the idea of dollar-cost averaging and buying shares at a lower price may have been appealing.  Besides, the market had a long-term upward bias, and it would be decades before you would tap into your 401k or IRA.  Why not go for it?

But today, as retirement approaches, market volatility can be much more disruptive.  A big decline in stocks at the onset of retirement could create significant problems down the road.  We will handle these conversations at your leisure, but a shift towards assets that are not as volatile may be more suitable.

We do not want to completely avoid equities.  Some Investors may be tempted to exit stocks.  That might not be the right choice either.

Instead, we want to take on the right level of risk.  In most cases, some exposure to stocks is the best path.  But the growth-oriented strategies of your youth that helped build your nest egg should probably be tempered in retirement.

2. Be careful taking Social Security too early.  There are some reasons to opt for Social Security when it becomes available at age 62.  For many, however, that will reduce their lifetime earnings from Social Security.

Today, the full retirement age runs between 66 and 67 years old, depending on the year you were born.

Individuals who collect Social Security beginning at age 62 receive 25% less in monthly benefits than if they had waited until full retirement age.[1]  This assumes a full retirement age based on a date of birth between 1943 and 1954.

Delaying Social Security until age 70 allows you to receive the maximum benefit that is available.

Rules governing Social Security are complex, and the information we have provided is simply a general overview.

Much will go into your decision to begin collecting your monthly benefit.  It goes without saying that we are happy to lay out various strategies so that we can best position you when the time comes.

3. Implementing the correct distribution strategy.  If all your retirement assets are locked up in a Roth IRA, taxes are much less of an issue when you withdraw funds for living expenses.  However, many of us have our savings in a traditional IRA or 401k.  Distributions will be taxed at your marginal tax rate.  You may also be liable for penalties if you withdraw before the age of 59½.  

Watch out for the Required Minimum Distribution (RMD) for your IRA, which now begins at age 72 (70½ if you turned 70½ prior to January 2020).  You may decide to leave your IRA alone until RMDs are required.

Some may choose to take withdrawals prior to age 72 to reduce future RMDs and the potential tax implications of large withdrawals when they do become mandatory.

It is a complicated topic that could be explored in depth.  Our goal is to make you aware of the idea.  There are ways to maximize your benefits and minimize costs.  We will tailor our recommended strategies to your specific needs.

4. Spending too much or spending too little.  When you retire, your lifestyle will change.  You will have the opportunity to enjoy new experiences and enjoy them on your terms.

But let me gently caution you not to overspend in the early years of retirement.  Recognize that you will be living on a fixed income, and you have a finite ability to earn extra cash.

At the same time, some retirees can be too cautious about spending.  They have ample reserves but sometimes guard them too closely.  We applaud those who want to leave a financial legacy to their children but consider balancing that desire and have some fun in your retirement.

5. Be aware of scams.  Be very leery of individuals and companies that prey on the elderly and their desire to grow their savings.  We are always happy to provide you with an objective review of any investments you are presented with.  Remember, if it looks too good to be true, it usually is.

6. You may live longer than you expect.  Do not let the success of your retirement plan be predicated upon saying goodbye to your loved ones shortly after leaving the workforce.  Life expectancy and longevity can only be estimated.

Some folks will live well into their 80s and 90s.  Continue to plan as if you will be tapping into your savings long after you have retired.

7. Stay active, build upon social ties, and volunteer.  It will help keep you physically fit and mentally sharp.  Just as we have a plan for your finances, it is critical to have a plan that keeps you active and helps you enjoy retirement.


[1]Benefit Reduction for Early Retirement. The United States Social Security Administration, 25 Nov. 2008, https://www.ssa.gov/oact/quickcalc/earlyretire.html. Accessed 15 April 2021.