Getting to a complete retirement plan

How to figure out the what, where, and when

What your retirement looks like is unique to you.

Chances are, however, whatever you're picturing, it's not your investment portfolio. But when people prepare for retirement, they often focus on finances, forgetting about the other essentials.

I tell my clients that achieving a happy retirement is as much about their purpose—what they want to do and where they want to do it—as their portfolio.

Plan for how to fill your time

Less than half of workers have thought about what they'll do in retirement.*

Staying on the job

The majority of workers expect to keep working in retirement.*

How should I spend my time?

Less than 50% of workers have thought about how they'll occupy their time in retirement, according to the 2020 Retirement Confidence Survey.

It's important that your plan for what you'll do in retirement factors in the aspects of working that you'll miss. For most retirees, that's not only the steady income. It's the social connections, the purpose and goals, and mental stimulation.

Keeping that in mind, here are some options for ways you can keep yourself connected and engaged:

  • Give back. Volunteering can be a meaningful way to spend your time. You can help others by using the skills you developed during your career, or even learn new ones.
  • Stay active. Poor health can derail the best-laid plans. Look for ways to build exercise into your postretirement days, as well as activities to keep your mind sharp.
  • Take classes. Retirement is a great time to finish your degree or simply learn something new. You can also choose from hundreds of online courses, some of which are free.
  • Start traveling. Maybe you'd like to do some cross-country RV'ing or are dreaming of a future international trip. Just keep in mind that traveling can be expensive. An advisor can work with you to make sure your anticipated retirement income aligns with your goals.
  • Be social. Much of what retirees miss about work is the relationships they've built. So make a plan for maintaining your current relationships, and building new ones.
  • Keep working. The Retirement Confidence Survey found that 71% of workers expected to do some kind of paid work in retirement. Although the continued income is an incentive, you may choose to keep working because you enjoy it.

Avoid these pitfalls if you keep working

Even if you decide to keep working, you shouldn't put off certain retirement decisions. A financial advisor can help you avoid these missteps so they don't end up eating into your income:

  • Taking Social Security early and having part of your payment withheld.
  • Failing to take your RMDs.
  • Underestimating your taxes.
  • Triggering Medicare surcharges.

Need help with your retirement planning? Our advisors are here for you.

Need help with your retirement planning? Our advisors are here for you.

Where should I live?

Once you have an idea of what you want to do in retirement, the where may become clearer.

Here are a few options to consider:

  • Staying put. According to the AARP, 75% of people age 50+ want to remain in their current home. One reason to stay is the cost savings if your home is paid off. However, you'll still need to plan on maintenance expenses and modification costs to help you age in place.
  • Going smaller. Downsizing is an attractive option if you want less to maintain. You could also realize a profit from selling your home, and then reinvest those dollars back into your retirement savings. Just remember to account for any moving-related expenses.
  • Moving away. You may want to consider living in another part of the country. Some states are more retirement-friendly than others, offering a lower cost of living, better access to health care, lower taxes, and more. You can refer to the best retirement states charts below to get started with your research.
  • Joining a community. If you're social and like to participate in organized activities, a retirement community might be right for you. And if you're concerned about how you'll cope as you age, try finding a community with graduated care services. Just be aware that these communities often charge hefty up-front fees in addition to your monthly living expenses.
  • Mixing it up. Maybe you're not sure where you want to live, or you're not ready to commit to a particular choice. You may want to rent somewhere to try it out. Another idea might be to plan different living options for various stages of your retirement.

As you start to think through the possibilities, you may want to meet with an advisor to help you weigh the pros and cons of each option.

Top 5 best retirement states

1. Florida
2. Colorado
3. New Hampshire
4. Utah
5. Wyoming

1. Hawaii
2. California
3. Connecticut
4. Minnesota
5. New York

1. Mississippi
2. Alabama
3. Oklahoma
4. Tennessee
5. Arkansas

1. Maine
2. Florida
3. West Virginia
4. Vermont
5. Montana

To identify the most retirement-friendly states, WalletHub compared the 50 states across 3 key dimensions—affordability, quality of life, and health care—with those featured here as Best overall topping the list. There were also subcategories of rankings, including the 3 highlighted here: highest life expectancy, lowest cost of living, and highest % of population 65+.**

When should I retire?

Once you've figured out what you want to do and where, if you're still working, you also need to decide on the when. An advisor can help you to figure out the finances, but there are a number of resources you can use to start working through the numbers.

See when you can retire

Assuming you have or will have the money you'll need, here are couple of other things to consider in determining when to retire:

Taking early retirement

Generally, this means retiring before the ages you'd qualify for Social Security or Medicare; 62 and 65, respectively. If you have a plan for what you'll do with those extra nonworking years, the main thing to consider is that you'll most likely need to accelerate your saving.

Retiring earlier gives you less time to accumulate assets and means you'll be drawing on those assets longer. Once you've put together a reasonable retirement budget, you may want to test it out for a year or so. That way you can make any adjustments while you're still bringing in a paycheck.

If you're thinking of retiring early, it would be wise to meet with an advisor sooner rather than later so they can help you figure out how best to make it happen. You'll also want to discuss your plan with your spouse or partner to get their support.

Retiring together or separately

As you and your partner plan for retirement, it's good to think through different scenarios of how it could play out. Although you may picture retiring together, it may not be what works best for you both. You'll need to consider your ages, your individual jobs and incomes, and how each of you are planning to spend your retirements.

It's important to get on the same page well before it's time to start that next chapter.

*Source: Retirement Confidence Survey 2020, Employee Benefit Research Institute (EBRI), April 2020.

**Source: Best states to retire, WalletHub, 2020.

Ready to complete your retirement plan?

Working with Vanguard Personal Advisor Services gives you anytime access to advisors who are fiduciaries—always acting in your best interest. We’ll work with you to build a financial plan focused on what you want to achieve with your retirement.

Ready to complete your retirement plan?

Working with Vanguard Personal Advisor Services gives you anytime access to advisors who are fiduciaries—always acting in your best interest. We’ll work with you to build a financial plan focused on what you want to achieve with your retirement.

All investing is subject to risk, including the possible loss of the money you invest.

When taking withdrawals from an IRA before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax.

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