The resurgence of vinyl records, which outsold CDs in 2022 for the first time since 1987 with over $1 billion in sales, points to a powerful cultural nostalgia. This sentiment extends to financial planning, as an overwhelming number of workers now long for the security of traditional pensions.
According to a recent survey from the Nuveen and TIAA Institute, 93% of 401(k) plan participants believe it is important to have the option to convert their savings into guaranteed monthly income. Two-thirds of respondents said such an option would make them feel more confident about retirement. This highlights a central challenge for retirees: how to transform a lump sum of savings into a reliable income stream that supports them through every stage of life.
Retirement, much like a vinyl record, typically has two distinct sides. It often begins with a period of high energy before flipping to a slower tempo, with each phase having its own unique rhythm, needs, and financial considerations. A successful retirement plan accounts for both the active, early years and the quieter, care-focused years that follow.
### Side A: The Active and Adventurous Years
For many new retirees, the top aspirations are to pursue new hobbies and seek new adventures, according to an Allianz survey. This initial phase is often when people fulfill the goals they have been dreaming about for decades.
“I often see clients move to a new city, travel the world, and generally make the most of their physical health while they still can,” says Jacob Martin, a Certified Financial Planner at Keeler & Nadler Family Wealth.
Spending patterns reflect this burst of activity. Research from JP Morgan shows that Americans with $1 million to $3 million in investable assets typically reach their peak spending in midlife and early retirement. This is often followed by a dip before expenses rise again later in life due to healthcare needs.
Martin encourages clients to embrace this early phase. “Some retirees hold back, thinking they’ll spend more later,” he says. “But this is the decade to really live. Spending more from 65 to 75 often works just fine since costs usually drop later.” He recommends setting up regular withdrawals from investments to create a consistent cash flow, making retirees feel more confident about spending on their priorities.
Ralph White, a financial planner at Arrivity Financial Planning, suggests creating separate pools of money for different goals. He advises maintaining a traditional retirement portfolio alongside a dedicated fund for active pursuits. “Since this is such a finite period of time, I don’t want market downturns to impact this,” White says. “I recommend setting aside funds specifically for travel or other fun activities, ideally in a separate savings or conservatively invested brokerage account.”
### The Flip: Easing into the Next Chapter
Eventually, the tempo of retirement slows. This gradual transition from adventure to a quieter rhythm can be prompted by changes in health, evolving priorities, or a shrinking budget. Martin notes this shift typically emerges between ages 75 and 85.
“This is when I start to see health become a limiting factor,” he says. “Big trips and active pursuits become harder to manage. Even if outside care isn’t yet needed, spending tends to drop and bottom out around age 80.”
This change is rooted in biology as much as lifestyle. Research shows that after age 30, muscle strength declines by 10% to 15% per decade, accelerating to a loss of 25% to 40% per decade after age 70. This means daily routines may require more assistance, leading retirees toward lower-intensity activities.
Planning for this transition involves ensuring your assets can last, especially with inflation eroding purchasing power. One critical decision is when to claim Social Security, says Bill Shafransky, a CFP and senior wealth adviser at Moneco Advisors. “Taking your benefit before full retirement age results in a permanently lower monthly payment,” he explains. “That smaller base means future cost-of-living adjustments will also be smaller, which can add up over time.”
### Side B: Slower, Quieter, but Rich with Meaning
The later years of retirement offer a different tempo—slower and more reflective, but no less meaningful or, potentially, less expensive. Spending often rises again during this stage, driven largely by increased healthcare and potential long-term care needs. Fidelity estimates that a 65-year-old retiring in 2025 can expect to spend an average of $172,500 on healthcare throughout retirement.
Genworth’s 2024 Cost of Care Survey places the national median annual cost of assisted living at $70,800, explaining why two-thirds of workers worry about their health as they age. Martin advises considering long-term care insurance to help cover these later-life expenses. “If you’ve planned for healthcare needs on the back end,” he says, “you can feel more comfortable spending freely during your earlier, more active retirement years.”
Shafransky notes that many pre-retirees have a blind spot regarding late-life health. “They think, ‘That won’t happen to me.’ But even if long-term care insurance isn’t the right fit, it’s essential to have a financial strategy for a worst-case scenario.”
Thriving in later life also depends on non-financial preparation. Research indicates that people with a sense of purpose experience less cognitive decline. Staying mentally and socially engaged can help prevent depression and memory loss, while regular volunteering is linked to slower biological aging.
Despite the challenges, these years are worth anticipating. Studies show that older adults tend to be happier and more emotionally resilient than their younger counterparts, often living more in the present and appreciating time. It seems the “old school” approach has its merits, a sentiment captured by John Lennon, who famously said, “Life is what happens when you’re busy making other plans.”
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