Accumulating wealth and saving for retirement is a familiar concept for many people, even if the specific strategies aren’t. But what about when you transition into retirement and need to make the switch from saving to spending? Is your portfolio set up for success in your golden years?

Having a financial plan to support you once you’re actually in retirement doesn’t always get the same attention as advice for setting aside savings in your working years. Consider these key components of a successful financial plan in retirement:

1. Align Your Financial Plan to Your Personal Values

Your financial plan should reflect what matters most to you. Maybe you once focused on funding education or building wealth through sustainable investing. But now your priorities have largely shifted, and it’s time to reassess. 

Additionally, if you share finances with a partner, it’s important to check that your goals align. For example, if your top priority is planning for your children’s financial future, but your partner wants to travel, those differences can impact how you allocate assets and plan your estate. A practical approach might be to set up separate accounts, one for family planning and one for travel, so each is a priority. Regular check-ins can help you stay aligned and avoid misunderstandings as your goals evolve.

2. Regularly Review Your Retirement Income Sources

Once you retire and no longer have a regular paycheck, your monthly income can become harder to predict, especially when you consider market volatility, inflation, public policy changes, and fluctuating expenses. That’s why regular reviews are essential.

• Start with a clear picture of your retirement income.

Estimate how much you’ll receive from each source and how withdrawals will affect your portfolio over time. 

• Modernize your portfolio approach.

The old 60/40 stock-bond mix isn’t the go-to strategy anymore. Many retirees now explore total-return approaches or add alternatives for more flexibility. 

It’s crucial to review your investment accounts, Social Security statements, and any pension or annuity income at least once a year or after any major life events. Staying proactive helps ensure your plan remains aligned with your goals as conditions change.

3. Plan for Tax Liabilities

Retirement doesn’t mean the end of taxes. You may owe income tax on withdrawals from tax-deferred accounts, and even Social Security benefits can be taxed.

Awareness and proactive planning are essential for making informed decisions. This includes timing withdrawals, exploring strategies such as Roth conversions or charitable giving, and preparing for any liabilities your beneficiaries may face. Taking action now can help you manage future tax burdens and keep your plan on track.

Important things to keep in mind:

• The One Big Beautiful Bill Act introduced a $6,000 personal exemption for retirees age 65+, and catch-up contributions for ages 60–63 have increased to $11,250.
• Most non-spouse heirs must empty inherited IRAs within 10 years; factor this into estate planning.
• Some states’ tax pensions or Social Security differ, so review before relocating.

4. Incorporate Estate Planning

No financial plan is truly complete without an estate plan. Everything you own makes up your estate, and planning ensures those assets are handled according to your wishes. Many people assume an estate plan is only for the wealthy, but anyone who has specific wishes for their assets needs one. 

A well-prepared estate plan can:

• Help preserve the financial security of your loved ones
• Manage taxes and administrative costs
• Simplify the process of transferring assets to heirs

5. Prepare for Sequence of Returns Risk

Also known as sequence risk, this is the risk that comes from the order in which your investment returns occur. You want to make sure your plan helps guard against the risk of experiencing significant negative returns early in retirement. This is particularly important for retirees who depend on investment income to fund their lifestyle. As with most risks, effective portfolio diversification is one of the key ways to mitigate this risk.

6. Implement Risk-Mitigation Strategies

During your earning years, you had time to recover from market downturns. In retirement, that time span is shorter, so planning ahead is critical. Implementing risk-mitigation strategies can help protect your portfolio from a market downturn that could derail your retirement.

Currently, equities and bonds are trading at historically high valuations, and with yields expected to be exposed to risk in the coming months, bonds may not provide the same protection they used to. With markets at historic highs, it’s smart to explore strategies that help protect your portfolio, like alternatives, options-based hedging, and inflation protection.

Contact a Wealth Enhancement advisor about your retirement transition today.

Get Your Financial Plan in Order

Remember, it isn’t enough to simply incorporate these elements into your financial plan; you’ll also need to review them regularly to ensure your needs are met as your life changes. A financial plan isn’t set-it-and-forget-it; it’s an evolving strategy that is meant to adapt to your changing circumstances and retirement goals.

Whether you don’t have a plan for retirement or it’s been a while since your plan was updated, you may benefit from taking the time to talk to a financial advisor.

Transitioning into Retirement FAQs

How can I estimate healthcare costs in retirement?
Healthcare can be one of the biggest expenses in retirement. Planning for Medicare premiums and out-of-pocket costs helps you avoid surprises. You can consult a financial advisor or use tools like retirement calculators to model these costs.

What role does inflation play in my retirement plan?
Inflation erodes purchasing power over time. Even modest inflation can significantly impact your expenses over a 20–30-year retirement. Strategies like investing in assets that historically outpace inflation (e.g., equities, Treasury Inflation-Protected Securities [TIPS]) can help.

Should I pay off my mortgage before retiring?
This depends on your cash flow, interest rates, and overall financial goals. Some retirees prefer the peace of mind of being debt-free, while others keep a mortgage for liquidity or tax reasons.

How do I plan for unexpected expenses?
Emergency funds remain important in retirement. It’s a good idea to set aside cash for home repairs, medical emergencies, or family needs to avoid dipping into long-term investments during market downturns.

How do I decide when to claim Social Security benefits?
Timing affects your monthly benefit. Claiming early (age 62) reduces benefits, while delaying up to age 70 increases them. Consider longevity, health, and other income sources when making this decision.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

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