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The key to a successful transition into retirement lies in a variety of strategies, with financial and non-financial preparation being the most important, one expert says.
Fritz Gilbert said: “The highest single correlation with success is how much time you spend preparing for retirement – not just in financial terms, which is obvious, everyone does it, but in non-financial terms It’s not so obvious,” says , author of “Keys to a Successful Retirement” and a guest on a recent episode of Yahoo Finance’s “Decoding Retirement.”
Gilbert, who also publishes the Retirement Manifesto blog, says the more time you spend planning for your retirement, the greater your chances "of discovering things in retirement that will give you the sense of fulfillment you want." Owned after retirement. "
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Many would-be retirees don't start thinking about their postretirement plans until after they've left the workforce. However, Gilbert took a different approach and started planning years in advance — a move he believes was crucial to his success.
"It certainly helps," he said. “It turns out that the more planning you do in advance, the smoother the transition will be.”
For retirees to make sure they have enough money to maintain the lifestyle they want, Gilbert recommends tracking spending before retirement.
"You can't retire without a good baseline of spending," he says. "Ultimately, it's a math problem. The more variables you can eliminate, the better your plan will be."
Read more: Retirement Planning: A Step-by-Step Guide
According to Boston College's National Retirement Risk Index, 39% of working-age households will be unable to maintain their standard of living in retirement.
In Gilbert's case, he and his wife tracked every expense for 11 months to establish a baseline and then adjusted for retirement by accounting for layoffs, travel and other changes. He also uses tools like the 4% rule (spend 4% of your portfolio each year) as a guide.
"See how it compares to the estimated spending numbers," he said, noting that if it's close, you should be fine. But if the difference is small, you may want to consider working longer hours or cutting back on expenses.
Gilbert also recommends his “90/10 rule.” The self-professed spreadsheet junkie said before retiring that he spent 90 percent of his time thinking about money and only 10 percent focusing on the non-financial aspects of retirement.
"I'm a real money junkie," he said. “I’m really focused on the numbers.”
However, once he decided he was financially stable and retired, the amount of time he spent with money completely shifted.
"When that transition happens, you find that you don't care about money as much anymore because you've solved the problems and know what you have to spend," he said. "Then you start thinking, what am I going to do with my life? What will make me feel fulfilled and excited every day? And it's not money. Money is a means to an end. But when you retire, you start looking for purpose, not just purpose. It’s a means.”
The transformation surprised Gilbert. "It was a mental shift that I didn't expect," he said. "That was one of my biggest surprises. It's a fairly common reality that you do worry a lot less about (money) when you get settled."
Gilbert explains how work often provides people with the "Big Five": identity, structure, purpose, fulfillment, and relationships.
Retirees must find alternatives. What will they do? First, it's critical to recognize the importance of replacing the Big Five because they disappear once retirees leave the workforce.
Gilbert said many people struggle to find structure, purpose or connections in the early years of retirement. "That's when you start to realize (you're) missing these things. All of a sudden, your life has no structure."
For his part, Gilbert began taking on the Big Five by starting a blog three years before his retirement. “I’m always looking for things that have the potential to grow into something that will make me feel fulfilled in retirement,” he said. "So I pursued it...now what does that give me?"
In short, it gave him a sense of identity, purpose and structure.
That's why he encourages future and current retirees to replace the Big Five by actively exploring their curiosities.
“Pursuing curiosity is not a skill we have practiced for a long time,” Gilbert said. "So it's rebuilding the muscle, learning to explore, having fun with it, and recognizing that you're going to try a lot of things that don't work... It's a serendipitous process. It's not a spreadsheet. But if you get better in time. "
Retirement is not just a personal decision, it affects the entire family.
Gilbert stresses the importance of discussing expectations before retiring. Drawing from his own experience, he and his wife conducted a "retirement test," spending 10 days together talking about their goals, the balance between "me time" and "us time," and their travel preferences.
He said it would also help with regular check-ins in retirement to meet changing needs and expectations.
Despite all of Gilbert's planning and preparation, retirement did bring some unexpected surprises and challenges to Gilbert.
Changing from a saving mindset to a spending mindset is harder than expected.
"It's difficult to move from accumulating savings to using it because you know it has to last a lifetime," he said. This is especially true for retirees who worry about running out of money. "Continuing to be conservative (and) underspend is a very common trend."
In 2024, a Goldman Sachs survey showed that 67% of retiree respondents said they had too much monthly expenses, while 55% reported having credit card debt.
Gilbert recommends using the bucket method to create a retirement income plan as a way to address the fear of running out of money. The bucket method involves dividing your assets into separate "buckets," each designated for a specific time frame or purpose.
Typically, it consists of a short-term bucket, which holds cash or low-risk investments to cover immediate expenses (e.g., 1-3 years); a medium-term bucket, which holds moderately conservative investments for expenses over the next 3-10 years; and long-term investments, These include growth investments such as stocks, which can be used for more than 10 years after retirement.
Mentally, Gilbert's retirement was just as he imagined it would be: pursuing his curiosity and exploring new interests on his own terms.
Where that mentality took him, however, was completely unexpected. For example, he never imagined he would have a woodworking shop or a dedicated writing studio, but these came about through unexpected opportunities, such as charity work.
“The biggest surprises and the biggest excitement come from following where my curiosity leads me,” Gilbert said.
He also discovered that he could find fulfillment in retirement by focusing on others. He said retirement is the perfect time to give back to the community, whether through mentoring, volunteering or charity work.
“Start looking at people who may not have made it 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 tools to plan for your future decoding retirement. You can find more episodes on our website Video Center or watch your Preferred streaming services.