More than 8 Esteemed Experts Offer Smart Strategies for the Transition to Retirement

More than 8 Esteemed Experts Offer Smart Strategies for the Transition to Retirement

The transition to retirement is exciting and scary.  Like all big events — graduations, relocations, marriage, childbirth and more — life will never be the same again.
transition to retirementTo make your planning for this transformation easier, here is advice from retirement and personal finance experts.

Go for Risk and Reward

You have a lot of choices for how to invest your retirement savings. You can create predictable income streams from systematic drawdowns and relatively “safe” investments. Or, you can ride a roller coaster of returns and probably see some years of high income and some years of low — but ultimately a higher average income over your lifetime.

Neal Frankle is a Certified Financial Planner and popular columnist on The Wealth Pilgrim, a personal finance blog. He suggests the riskier strategy for your transition to retirement.

Frankle says: “If you want to create “safe” income from mutual funds you must first define “safe”. Is it more important that your income is fixed? If that’s how you define “safe” you will struggle with inflation down the line and ultimately this decision may jeopardize your financial future. I can make the case that this route is anything but “safe” over the long run. If you define “safe” as having sufficient income over the long-run you’ll turn to equity growth. The downside will be short-term fluctuation of your capital and your income.”

Look Forward to Something

Janet Tyler Johnson writes for Investing Truths.  However, her advice is not about how much you save or how you invest.  She believes that the key to a great transition to retirement is in knowing what you want to do with this phase of your life.  We All Need Things to Look Forward To.

Tyler writes: “It’s the clients that are retiring that I worry about the most because some of them have had very fulfilling careers and really don’t know what they are going to do in the next chapter of their lives. To truly invest in yourself you have to have things to look forward to whether it’s your next vacation, or taking up a new hobby, or creating a business out of a hobby you already have, or getting involved in some new cause you care about.”

Not sure what is next for you?  Try this list of 120 Ideas for What to Do in Retirement.

Save Everywhere

You have options about where you save for retirement.  You can put money into your company’s 401k plan, a health savings account, an IRA and even non tax advantaged accounts.

So what is the best choice?  According to the personal finance web site, “Living on the Cheap,” if you are nearing retirement, the right answer just might be “ALL of the above.”

You have limited working years ahead of you.  Now is the time to max out all of your savings options.  Save as much as possible using tax advantaged options when available.  And, don’t forget that you can save more into IRAs and 401ks with “catch up contributions” after the age of 50.

The more you save now, the sooner you can retire and the more you can spend.

Small Things Matter

On Investing to Thrive, Julie Rains describes “What Training for a Half Ironman Taught me About Investing.”

Once observation she has is that small things matter, “I figured that in a 70.3-mile race over seven to eight hours, short stops here and there wouldn’t matter. But they did — snippets of time eroded my race time by 15-20 minutes minimum…”

“Similarly, in finance and investing, there’s nothing inherently wrong with paying a fee or a even premium for a valuable product or service. And decisions about the larger issues are typically more important than smaller ones. But it’s a big mistake for me to dismiss the idea that small charges don’t make a difference. They can easily erode my investment returns as well as my ability to set aside money for investing. I grasp more clearly how paying attention to the details is important over the long haul.”

Do you even know how much you are paying in fees?

Focus on Things You Can Control

In life and in investing, there are a lot of unknowns.

Taylor R. Schulte, a Certified Financial Planner in San Diego and the founder & CEO of Define Financial, recommends that instead of worrying too much about external economic factors, you focus instead on things you can control like “saving more, spending less, cutting costs, reducing investment expenses, improving asset allocation, using asset location (i.e. what type of accounts your assets are held in) and mitigating taxes.”

Scale Back Risk in Your 50s

As you age, your investments have less time to recover from big losses.  As you transition to retirement, you might need access to money and have to sell before you can regain your initial investment or some of your previous profits.

Joseph Hogue of My Stock Market Basics recommends a balanced asset allocation strategy: “The solution for investing safety in your 50s…pulling back on risk in your portfolio. The target asset allocation calls for just half your investments in stocks, followed by bonds (25%), real estate (15%), and five percent in both cash and alternative assets.”

Use the Bucket Strategy for Generating Retirement Income

Fitz Gilbert on the Retirement Manifesto created a compelling infographic describing how to put your money into 3 different buckets — 3 different accounts, each with their own goal and investment strategy.

  • The first bucket contains cash or cash equivalents.  This purpose of this money is avoiding having to sell stocks in a downturn.
  • The second bucket is about creating income from your money.  These assets you might want to invest in bonds, CDs, REITs and dividend paying stocks.
  • The third bucket is for long term growth.  This money can be exposed to more risk and can be invested in stocks, junk bonds and commodities.

Get Serious in Your 50s

Gary Weiner of offers 9 steps you should take in your 50s. He says that your 50s are “a marker in your prime working life. You’re now a senior in the real terms of work, experience, and your earnings potential. Now is time to get your ducks all lined up for the big day when you can actually walk into the golden years’ sunshine of retirement which is inching closer to you now more than ever before!”

Retirement Math

John Nardini on, suggests a simple formula for retirement. He outlines retirement math that enables you to “retire with your assets able to create enough income for you to live on (without spending any of the assets).

It is Not All About Investments

“Focusing too much on the investing component of financial planning could be of detriment to your overall retirement plan…

“As advisors (and as investors) we have no ability to control the stock market, so why do we pay it so much attention? On the other hand, we can control our behavior.” says Having more than one financial advisor makes it more likely your exclusive focus will be on your investments rather than your financial plan. That’s bad.” says Benjamin Brandt in his article, “Do I Need Two Financial Advisors,” on

Know What It Takes to Get the Income You Want

“Don’t be too cautious with your investments in retirement, inflation is a retiree’s worst enemy. On the flip side don’t take on excessive investment risk in an effort to catch up if you feel that you are behind where you need to be.” says Roger Wohlner in his article, “Is a $100,000 Per Year Retirement Doable?” on

Visualize Your Future, Know What You Need and Have a Plan

We at NewRetirement think that you will do a better job transitioning to retirement if you have a solid understanding of what you have and what you will need.  And, it is not all about savings and investments.

The NewRetirement retirement calculator is a highly detailed planning tool that let’s you model the best time to start Social Security, how you might be able to use home equity, how you might pay for long term care and much more — including trying what if scenarios with various investment accounts.

Best of all, this tool let’s you set different spending levels for any time period you can imagine. Rethinking your retirement budget can dramatically lower how much you need overall and make you feel better about your retirement prospects.  The planning system was named a best retirement calculator by the American Association of Individual Investors (AAII).

If you can create a clear picture of your future, then you can get there.