Retirement is changing. It’s no longer just about relaxing in rocking chairs, gardening, or spending time with grandchildren. Many Americans now want a more exciting and active retirement.
Financial Engines, explained that retirement is becoming more dynamic. “There is no one-size-fits-all way to retire,” Smith said on the Decoding Retirement podcast. Traditionally, retirement was seen as a time to slow down and focus on family. But that view is shifting.
According to Edelman’s Everyday Wealth in America report, about 39% of Americans want an adventurous retirement. Meanwhile, 42% want to stay active. Some even imagine living a minimalist or nomadic lifestyle.
This change means retirees and financial advisers must rethink how they plan income and expenses. Retirement may not be a single event but a phased process. Questions like whether to work part-time, consult, or earn money from travel or hobbies affect how retirees budget and withdraw funds.
In the past, people estimated a retirement savings goal, adjusted for inflation and taxes, then withdrew money steadily. Now, Smith says retirees should plan in segments. For example, what will your first three to five years look like? And the next three to five?
A key challenge is deciding how to withdraw money from different accounts—like Roth IRAs, traditional 401(k)s, HSAs, brokerage accounts, and Social Security—without paying unnecessary taxes.
Smith stressed the importance of a full financial plan. “You have to know what you have before you can build a roadmap,” he said. This means understanding all income sources, benefits, expenses, and account types.
Early in retirement, before Social Security or pensions start, retirees may fall into a low tax bracket. This can be a good time to withdraw from traditional IRAs or 401(k)s to avoid higher taxes later. Later, when guaranteed income begins, it might be better to use brokerage accounts, which often have lower capital gains taxes.
Creating a tax-smart withdrawal plan is just one part of retirement planning. Choosing the right income strategy—whether the 4% rule, bucket planning, annuities, or a mix—is also important.
Smith recommends working with a professional financial adviser. He advises retirees to ask:
Are you a fiduciary?
What are the total costs?
What happens if the adviser is no longer available?
The goal is to turn your savings into a steady, tax-efficient income stream. “Now it’s your job not to keep saving it, but to know how, when, and how much to withdraw,” Smith said.
Smith shared how his own journey—from wilderness emergency medicine to financial planning—taught him valuable lessons. He once considered becoming a mountain guide, a role that required careful planning and preparation.
His advice: “Plan for the worst, hope for the best, and don’t be disappointed with averages.” Retirement plans are not “set it and forget it” documents. They must be regularly reviewed and tested to ensure they work in real life, not just on paper.
In today’s world, retirement is more than a quiet ending. For many Americans, it’s a new adventure.
Related topics:
