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The key to a successful transition into retirement lies in many tactics, and preparation — both financial and nonfinancial — is among the most important, according to one expert.
“The single highest correlation to that success is the amount of time you spend preparing before retirement — not just on the financial stuff, which is obvious, and everyone does it, but the non-financial side is not as obvious,” Fritz Gilbert said. , author of “Keys to a Successful Retirement” and guest on a recent episode of Yahoo Finance’s Retirement Decode podcast.
According to Gilbert, who also publishes Retirement statement blogThe more time you spend planning for both aspects of retirement, the more likely you are to “find those things in retirement that will bring you the sense of fulfillment you hope to have in retirement.”
Many would-be retirees don’t start thinking about post-retirement plans until after they leave the workforce. However, Gilbert took a different approach, starting planning years in advance – a move he considers instrumental to his success.
“It definitely helps,” he said. “It has been proven that the more effort you put in upfront regarding this planning, the smoother this transition will be.”
In order to ensure that retirees have enough money to maintain their desired lifestyle, Gilbert recommended tracking spending even before entering retirement.
“You can’t retire without having a good spending baseline,” he said. “It’s arithmetic, ultimately. The more variables you can eliminate, the better your plan becomes.”
Read more: Retirement Planning: A Step-by-Step Guide
According to Boston College National Retirement Risk index39% of working-age families will not be able to maintain their standard of living in retirement.
In Gilbert’s case, he and his wife tracked all expenses for 11 months to establish a baseline and then adjusted for retirement by taking into account downsizing, travel, and other changes. Also use tools like the 4% rule (spending 4% of your portfolio annually) as a guide.
“See how that number compares to estimated spending,” he said, noting that if it’s close, you should be fine. But if it’s not soon, you’ll need to consider working longer or cutting back on expenses.
Gilbert also recommended the “90/10 rule.” Before retiring, the spreadsheet nerd said he spent 90% of his time thinking about money and only 10% of his time focused on the non-financial aspect of retirement.
“I was obsessed with real money,” he said. “I really focused on the numbers.”
However, once he decided his finances were secure and retired, the time he spent focusing on money was completely reversed.
“As that shift happens, you find yourself thinking less about money because you’ve kind of worked out the kinks and you know what you should be spending,” he said. “And you start thinking, What am I going to do with my life? What is going to bring me that fulfillment and that excitement every day? And that’s not money. Money is a means to an end. But when you get to retirement, you start looking for the end and not just the means.”
This transformation came as a surprise to Gilbert. “It’s a mental shift that I wasn’t expecting,” he said. “It was one of my biggest surprises. It’s a very common fact that you worry about (money) much less after you settle down.
Gilbert explained how work often provides people with the “Big Five”: identity, structure, purpose, sense of accomplishment, and relationships.
Retirees must find a way to replace those. How can they do that? First of all, it is necessary to realize the importance of replacing the Big Five because they disappear as soon as the retiree leaves work.
Many struggle early in retirement to find structure, purpose or relationships, Gilbert said. “That’s when you start to realize that you’ve lost those things. Suddenly you don’t have structure in your life anymore.”
In his case, Gilbert began to replace the “Big Five” by starting his blog three years before his retirement. “I was looking for things that could develop into things that would give me satisfaction in retirement,” he said. “So I pursued it…and what does that give me now?”
In short, it gave him a sense of identity, purpose, and structure.
That’s why he encourages both potential and current retirees to replace the “Big Five” by actively exploring their curiosities.
“Following your curiosity is not a skill set that we have practiced for a long time,” Gilbert said. “So it’s rebuilding those muscles and learning to explore and enjoy it and realizing that you’re going to try a lot of things that won’t work…it’s a process of serendipity. It’s not a spreadsheet. But if you get better in time.”
Retirement is not just an individual decision – it also affects the entire family.
Gilbert stressed the importance of discussing expectations before retirement. Through his own experience, he and his wife took a “retirement test,” where they spent 10 days together to talk about their goals, the balance between “me time” and “our time,” and their travel preferences.
It also helped to have regular check-ups after retirement to meet changing needs and expectations, he said.
Linda Ryall and Todd Nielsen look at each other’s phones at a charging station located at the Isaac Senior Center in Isaac, Washington, Friday, Nov. 22, 2024. (AP Photo/Manuel Valdes) ·Associated Press
Despite all the planning and preparation, retirement came with several unexpected surprises and challenges for Gilbert.
Switching from a saving mindset to a spending mindset was harder than expected.
“It’s hard to go from building a nest egg to using it, knowing it has to last a lifetime,” he said. This is especially the case for retirees who worry about running out of money. “It’s a very common tendency to remain conservative (and) underspend.”
In 2024, 67% of respondents to a Goldman Sachs survey indicated they had too many monthly expenses, while 55% reported credit card debt.
Gilbert suggested using the bucket approach to creating a retirement income plan as a way to address the fear of running out of money. The bucket approach involves dividing your assets into separate “buckets,” each designated for a specific time period or purpose.
It usually includes a short-term bucket, holding cash or low-risk investments to cover immediate expenses (e.g., 1-3 years); and the medium-term bucket, which contains fairly conservative investments to cover expenses in the next three to 10 years; and a long-term bucket, which includes growth-oriented investments, such as stocks, intended for use more than 10 years after retirement.
In terms of mindset, Gilbert’s retirement happened exactly as he imagined: he pursued his curiosity and explored new interests just as he had planned.
However, where this mentality landed was completely unexpected. For example, he never thought he would have a woodworking shop or a dedicated writing studio, but it came about through unexpected opportunities, such as philanthropy.
“The biggest surprises — and the greatest excitement — came from following where my curiosity led me,” Gilbert said.
He also discovered that he could find fulfillment in retirement by focusing on others. Retirement is an excellent time to give back, whether through mentorship, volunteer work or philanthropy, he said.
“Start looking at people who may not have arrived yet,” he said. “And find a way to use your time to benefit those in need.”
Every Tuesday, retirement expert and financial educator Robert Powell gives you the tools to plan for your future Retirement. You can find more episodes on our website Video center Or watch in private Favorite streaming service.
