Retirement is a new chapter in life, and expectations for this phase of life are shifting. To better understand people’s hopes, dreams and concerns in retirement, Edward Jones partnered with Age Wave, a thought leader on aging and longevity, on a series of studies. Here are five lessons learned from today’s retirees that may help you better prepare for and thrive in retirement:

1. Start saving for retirement as early as possible.

Retirement may seem like a long way off and it can be tempting to put off saving for it. But, on average, the retirees we surveyed said they should have started saving for retirement nearly a decade earlier than they did.And, as the chart shows, the cost of waiting a decade to start saving for retirement can be significant.

Source: Edward Jones. Assumes investing $550 per month, a 7% average hypothetical annual return and a retirement age of 65. This example doesn’t include taxes, fees or commissions, which would reduce the return. Figures rounded to the nearest $5,000.

Strategies and actions to consider:

    • Pre-retirees: Saving early and consistently can put you on a path toward achieving your retirement vision. Even if you’re not certain what your vision is, don’t delay saving – work toward saving 10%-15% (or more) of your income for retirement until you have a clearer picture of what retirement means to you.
    • Retirees: Since you’ve already retired, you can share your wisdom and experience with others. Talk to your kids and grandkids about the importance of saving early to help instill good financial habits in the next generation.

2. There’s no one-size-fits-all definition of retirement.

Being a retiree these days is mostly self-defined. In fact, there’s not an agreed-to milestone marking the start of retirement anymore: For some, it’s when they stop working or step away from their careers. For others, it’s when they start taking Social Security or reach a certain age. While more than 25% of retirees and pre-retirees still view retirement as a time for rest and relaxation, 55% now view it as a new chapter in life with many different possibilities.

Source: Edward Jones/Age Wave study, “Longevity and the New Journey of Retirement,” 2022.

For many, retirement activities are also increasingly likely to include work, further blurring the definition of retirement. Nearly 60% of retirees and pre-retirees say their ideal balance between work and leisure in retirement includes working in some way, whether it be working part time, cycling between work and leisure, or even working full time after retiring.1

Strategies and actions to consider:

    • Pre-retirees: The further you are from retirement, the cloudier your vision may be. But, once you’re within 10 years of your target retirement date, you’ll want to focus on outlining your specific vision and developing a personalized savings goal. If you’re unsure where to start, reflect on how you would spend your time if money wasn’t as much of a consideration. What would it take for you to be able to spend more of your time this way? Then, discuss your vision with your partner or loved ones to avoid surprises or contention down the road.
    • Retirees: Your definition of retirement can also evolve. Just because retirement started one way doesn’t mean that’s how it always must be. Reflect on how retirement is going for you. Is it what you thought it was going to be? If not, are there new things you’d like to try?

3. Retirement planning is not just about finances.

Preparing for retirement traditionally begins with finances. After all, finances provide the foundation for living comfortably and securely in retirement.

However, retirement planning and preparation are not solely about finances. A majority of retirees say that health, family, purpose and finances are all important to well-being in retirement. Yet many new retirees struggle to find a sense of purpose, the best way to organize their time and how to engage socially, post-work. In fact, 54% of retirees wish they had done better planning for these nonfinancial aspects of their retirement.2

Strategies and actions to consider:

    • Pre-retirees: Think about what gives you a sense of fulfillment and how you want to spend your time in retirement. You may want to even consider “test-driving” activities in advance of retiring to see how they suit you. This can help reduce the feelings of disorientation and uncertainty common among many new retirees.
    • Retirees: It’s not too late to make adjustments. Consider spending more time with family and friends, exploring new activities, volunteering and/or continued learning, to name a few ideas. Since choices can be deeply personal, the important thing is to take some action to find ways to spend your time in retirement that is fulfilling for you.

4. Make health a priority.

Healthy habits increase longevity and can help you live an active and fulfilling life. In fact, 85% of retirees felt that having good physical and mental health is key to living well in retirement.2

What’s the biggest worry of both pre-retirees and retirees? The cost of health care and long-term care (LTC).2 Yet more than two-thirds of pre-retirees planning to retire in the next 10 years say they have no idea what their health care and LTC costs will be in retirement.3

Most people think they’ll simply rely on Medicare in retirement. However, Medicare doesn’t kick in until age 65, and there’s a lot Medicare doesn’t cover, such as deductibles, co-pays, prescription drugs and long-term care services. There are additional insurance options you can consider to help pay for these costs, but you’ll need to ensure you have a plan to cover them.

Strategies and actions to consider:

    • Pre-retirees: Understand how you’ll be covered in retirement and the amount you may need to cover your costs, including LTC. The amount you need will depend on several factors, such as your age at retirement, your overall health, your family history and where you live. Depending on your current health care plan, you may also be able to save for health care through a health savings account (HSA), which can provide triple tax savings when used for qualified health care expenses.
    • Retirees: Review your health care and LTC coverage annually to ensure it continues to meet your needs, even if you’re enrolled in Medicare. You’ll also want to continue to evaluate your living arrangements to ensure you have the right mix of independence, available care and social connections for you, especially as you enter your later retirement years.
    • Whether a pre-retiree or retiree: Taking steps to improve your health can enhance your well-being in retirement, whether you’re young or old. In fact, taking steps to improve one’s health was among retirees’ favorite activities in retirement.1

5. Prepare for the unexpected and stay flexible.

Life doesn’t always go according to plan, which is why it’s just as important to prepare for the unexpected events that could impact your ability to achieve your dream retirement.

Retiring earlier than planned can happen for a variety of reasons: illness or disability, caring for a loved one, a layoff. This would likely reduce the years you earn and save and could force you to tap into your savings early. Temporary job loss, loss of a spouse, unexpected expenses, market downturns and inflation are some other risks that can put your retirement strategy off track.

Strategies and actions to consider:

    • Pre-retirees: Work with your financial advisor to pressure test your retirement strategy for different scenarios and to develop strategies to mitigate your risks.
    • Retirees: Even though you’re retired, your vision can still be derailed, so you’ll want to continue to work with your financial advisor to pressure test your strategy for the risks relevant to you. You’ll also want to monitor your spending and regularly review your strategy to help ensure you don’t outlive your assets. You may need to stay flexible with your spending during down markets or periods of high inflation, such as forgoing an annual increase or even reducing spending when possible.

Having an emergency fund is a good strategy to help cushion you against unexpected events. It may help you avoid tapping your retirement accounts early or selling investments in a down market to meet unexpected expenses. 

Partner with your financial advisor

Regardless of where you are on your retirement journey, your financial advisor can serve as your guide. And, as we’ve learned from retirees who have traveled their own road to retirement already, there is no better time than the present to get started on yours.

1 Edward Jones/ Age Wave study, “Longevity and the New Journey of Retirement,” 2022.
2 Edward Jones/Age Wave study, “The Four Pillars of the New Retirement: What a Difference a Year Makes,” 2021.
3 Edward Jones/Age Wave study, “The Four Pillars of the New Retirement,” 2020.

Katherine Tierney

Katherine Tierney is a Senior Retirement Strategist on the Client Needs Research team at Edward Jones. The Client Needs Research team develops and communicates advice and guidance for client needs, including retirement, education, preparing for the unexpected and leaving a legacy. Katherine has more than 15 years of financial services and retirement experience. She is a contributor to Edward Jones Perspectives and has been quoted in various publications.

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