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Robert Powell

March 25, 2021, 11:31 a.m. EDT

8 things successful retirees do

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Robert Powell

What does it take to achieve the retirement of your dreams? That’s the essence of the question we posed to dozens of financial planners.

What are the common characteristics of your clients who have a successful retirement? Did they have a budget? Did they save aggressively and invest prudently? Did they own enough life insurance? Did they focus on minimizing taxes and building after-tax wealth? Did they put in place plans to manage and mitigate all the risks they might face in retirement? Did they craft a well-thought-out estate plan?

Read: Obamacare health insurance just got a lot cheaper for early retirees

“There’s no ‘formula’ for a successful retirement,” said Robert Klein, president and founder of the Retirement Income Center. “Everyone’s situation is different. Having said this, successful retirees share a combination of financial and nonfinancial characteristics that enable them to appreciate and enjoy their retirement.”

Here’s a look at some of those characteristics.

Live beneath your means

Many older adults who are enjoying retirement did so by living beneath their means when they were saving and planning for retirement.

“What I see most in successful retirees and accumulators is the ability to live within or below their means,” Cheryl Costa, a principal at Woodside Wealth Management. “So, twenty-somethings choosing to ‘live like students’ and rent a cheap apartment while maxing out their 401(k)s. Thirty-somethings who don’t overextend themselves when buying a home. Forty-somethings who suggest public colleges for their high-schoolers and fifty-somethings who don’t trade up to expensive homes and cars just because they can.”

These people, said Costa, usually turn into successful retirees because they aren’t chasing the next shiny object. “And the beauty is that they don’t feel they are depriving themselves,” she said. “They do spend money on the things that are important to them. But, in a nutshell, they avoided lifestyle creep.”

Frank Paré, president of PF Wealth Management Group, also said successful retirees are not extravagant or living beyond their means. “They are laser focused on their cash flow,” he said.

In fact, they were always good stewards of their money, said Roger Whitney, the CEO of Agile Retirement Management and the host of Retirement Answer Man podcast “The most common characteristic is that they are consistently intentional in their decision-making,” he said. “Rarely, do they make rash decisions on spending or market timing. Even those with ‘average’ means.’”

Read: I’m 54 years old with a substantial nest egg and can live on $40K a year. Can I afford to retire?

Plan years ahead

Those who have successful retirements didn’t leave things to chance, either.

“They started planning years in advance and didn’t let retirement just happen to them,” said Moe Allain, a financial adviser with Baird Retirement Management.

Others have witnessed that as well. “For my clients that have successfully retired, the one thing that they all have in common is financial planning,” said Douglas Boneparth, president of Bone Fide Wealth. “They’ve all been dedicated to the planning process, which allowed them to stay focused on their retirement goal.”

On the financial side, Allain said, successful retirees, among many other things, created a budget, set aside at least one year’s worth of living expenses, saved for retirement before saving for their children’s college education, made sure they weren’t house rich, didn’t make large real-estate purchases in the first two to three years of retirement, didn’t let adult kids’ demands derail their retirement efforts, asked their financial advisers questions about withdrawal rates, or concentrated equity positions in employer stock earlier rather later, and crafted an estate, caregiving, healthcare, long-term care, and burial plans, that they actually understand.

Find a balance that works for you

While successful retirees aren’t necessarily wealthy, they have achieved financial independence suited to their individual lifestyles, said Klein.

Other financial planners agree. “Retirements seem to work best that align available resources with a lifestyle that affords achievable life goals once the paychecks stop,” said Michael Lonier, a retirement management adviser with Lonier Financial Advisory.

“There’s a balance implicit in this formula akin to Larry Kotlikoff’s economic smoothing — a balance that starts earlier in life and extends into and through retirement. Those who naturally find this equilibrium do not suddenly wake up in their late 50s shocked that they have no money and have done nothing to prepare for the day they can’t pay for four cars, a boat, and a beach house out of cash flow.”

Quite the opposite. “The successful future retiree is likely to be surprised they have more money than they ever dreamed, perhaps a couple million set aside, equity in house, a pension they had not given much thought to before, and aside from too large of an equity allocation left over from their younger days, are now looking for a safe solution to the retirement puzzle that does not hold their future hostage to the stock market,” said Lonier.

Doug Gross, a financial adviser with McLaren Wealth Strategies, also said successful retirees are not stressed financially. They have figured out how to live on the resources they have. “Individuals in that situation probably managed their spending and saving when they were working so this is not a big surprise,” he said.

Communicate with your partner

According to Rita Cheng, CEO at Blue Ocean Global Wealth, couples talking to each other is another common trait of a successful retirement. “They don’t need to agree,” she said. “They just need to talk.”

Of course, a meeting of the minds can also help. Allain, for instance, said it’s important that couples not only talk, but work toward getting “on the same page financially.”

In a similar vein, Podnos and others also noted that having a “good marriage and family structure” is important as well.

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