How to Retire

How does one retire?

There’s the simple answer: you stop working when you decide your career is over. Now you’re retired.

If you want to retire well, however, there are so many more considerations, certainly more than a guy can fit in one blog post. It could actually be an entire book, and in fact, it is.

I had the opportunity to review the latest publication from Christine Benz, which is based upon interviews with 20 experts in various aspects of retirement, and I’d like to share some of the common themes and highlights that I picked up from a perusal of the aptly titled How to Retire.

About the Author(s)

Christine Benz has been with Morningstar for more than 30 years, and she currently carries the title of director of personal finance and retirement planning. She is also the co-host of The Long View Podcast and author of the Morningstar Guide to Mutual Funds and 30 Minute Money Solutions.

I’ve been fortunate to cross paths with Christine on several occasions, including the speakers-only recording of the pandemic-era WCICON 2021 and more recently as speakers at the 2024 Bogleheads Conference which she was heavily involved in putting together. I’ve also been a guest on The Long View and you can listen to that episode here.

How to Retire is Christine’s book, but it would be awfully thin without the contributions of an additional 20 interviewees who offered their insights. You’ll likely recognize a number of these names. Some were interviewed here first, like Fritz Gilbert from Retirement Manifesto and JL Collins. Others are frequently featured on this site, like Jonathan Clements of Humble Dollar, Mike Piper the Oblivious Investor, Ramit Sethi, Wade Pfau the Retirement Researcher, and our physician friends William Bernstein and Doc G, a.k.a. Jordan Grumet, MD.

Rounding out the cast of experts are a collection of friends and colleagues of the author, most of whom I know or at least recognize, who clearly know their stuff in the realm of retirement planning.

20 Lessons for a Happy, Successful, and Wealthy Retirement

That’s the subtitle, and I think it describes what we all want retirement to be. The “20” lessons, which actually number in the dozens or even hundreds if you read closely, are designed to help you achieve those three goals of happiness, success, and wealth.

While the authors come from different generations, locations, and vocations, there is overlap in their recommendations. When numerous experts are singing the same tune, you should pay attention to the lyrics. The following are a few of those common themes.

Structure

Our working years are structured, and how we spend much of our time is pre-determined by the needs of the job. A lack of structure in retirement can be problematic for people, and it’s best to have some concrete ideas of how you will spend your free time when you have a whole lot more of it.

Relationships

For many, the workplace provides a built-in social outlet. Those daily interactions can be challenging to replace, so try to nurture existing relationships while putting yourself in places that facilitate meeting new people with similar interests.

Learn How to Spend Well

Some retirees will need to learn to follow a budget more closely when the regular paychecks stop. Others, like the supersavers who reach financial independence early, struggle to give themselves permission to spend what they have.

Retirement is a time to work on spending in a manner consistent with your means, whether that’s parting with more or less money than you’re accustomed to spending.

Keep Investing Simple

The experts interviewed consistently recommend owning a simple mix of stocks and bonds using index funds. For those who feel most comfortable with substantial cashflow, simple annuities can play a role.

Know Your Goals

Different retirees have different goals. Some want to leave the largest inheritance, others are more philanthropy-minded, and some just want to live large without running out of money. There is no one-size-fits-all approach to asset allocation and money management in retirement.

Peace of Mind Matters

The financial plan that’s most likely to give you the greatest returns over a 30-year period may not be the same as the plan that helps you sleep best at night throughout those 30 years. Understand that it’s OK to prioritize peace of mind over optimization.

Change is Inevitable

The future is unknowable, but you can expect some level of physical decline, and if you live long enough, some mental decline, as well. If you’re married, one of you may become a caregiver for the other, or you may be a widow or widower for a number of years. Your plan should have the flexibility to accommodate unwelcome but inevitable change.

Retirement Isn’t All or None

Several interviewees stressed the fact that easing into retirement by cutting out the least-enjoyable aspects of your work is a great way to make the transition.

For physicians, that might mean eliminating call shifts or avoiding the most challenging types of patients and cases. It may mean simply working fewer hours. It could mean an encore career that is less demanding or replacing paid employment with more flexible and rewarding volunteer work.

Understand Taxes in Retirement

Different sources of retirement income are taxed differently, if taxed at all, and it is advantageous to have an understanding of how your portfolio will be taxed as you take income and withdrawals from it. There may be a role for Roth conversions in retirement, especially for early retirees, and there are programs and professionals that can help you sort out the best approach.

Have an Estate Plan and Living Will

An estate plan helps you direct where you want your assets to go, but more importantly, a good plan helps your heirs avoid unpleasantries like probate, family feuding, and other headaches. Similarly, a living will and powers of attorney designations will help others direct your care when you lack the capacity to make important decisions.

Top Ten Takeaways

After each in-depth interview, Christine Benz lists three to seven “takeaways,” giving the reader about 100 succinct pearls from the 20 chapters of the book. I’ve aggregated some of those takeaways when sharing the common themes above, but I’d also like to share ten of my favorites by quoting them directly below. Eliminating the other 90% of these nuggets of wisdom was no easy task.

From Lesson 3 with Laura Carstensen: “We hear so much about the role of genetics in our life expectancy, but lifestyle choices play an even bigger role. It’s empowering to think about doing a few simple things better tomorrow–getting in 10,000 steps or reaching out to a dear friend you haven’t seen in a while.”

From Lesson 5 with David Blanchett: “Aggregate retiree spending does trend up toward the end of life due to high healthcare outlays, but those statistics are influenced by very high spending by a small subset of the population. Most retirees see spending drop throughout their retirements.”

From Lesson 8 with Wade Pfau: “There’s no single best style for generating income in retirement. Instead, finding the right retirement income strategy involves some introspection: your attitude toward taking equity risk or locking in a safe stream of income; your preference for flexibility or a permanent solution and whether you’d rather spend more early on to elevate your quality of life in the here and now or defer gratification to improve the odds that you won’t run out.

From Lesson 10 with JL Collins: “Cognitive decline, which JL referenced in this conversation, is a force to be reckoned with as we age. The trouble is, people experiencing cognitive decline aren’t necessarily in a good position to protect themselves; they’d ideally implement safeguards in advance. Implementing a simple portfolio and/or hiring a financial advisor to oversee your investments can help ensure that your plan doesn’t run into problems.”

From Lesson 11 with Christine Benz, interviewed by Susan Dziubinski: “A bucket strategy–holding cash reserves that can be used to meet living expenses in periods when the long-term portfolio has lost value–can provide valuable peace of mind for retirees in periods of market volatility.”

From Lesson 12 with Mark Miller: “As you embark on retirement, take a hard look at where you live: the physical space, the expense of maintaining it (including maintenance costs as well as taxes, insurance, and other outlays), and its proximity to friends and family, healthcare providers, and cultural amenities that you value.”

From Lesson 14 with Jamie Hoskins: “How will you determine success in retirement? On the financial side, is your goal to maximize your own enjoyment of your resources or to leave a substantial sum behind for children and grandchildren? Don’t stop with the financial piece, though. What things do you want to accomplish in retirement to that you’ll consider this period of life to be successful?”

From Lesson 15 with Mike Piper: “Consider lifetime giving to loved ones rather than leaving a large bequest at the end of your life. While “lifetime giving” seems to conjure up very big-ticket gifts, you can make a big impact with smaller gifts to loved ones–help paying down student loans, for example, or additional padding for a home down payment.

From Lesson 18 with Cameron Huddleston: “Many of us were raised to never talk about money, which is why we might be reticent to share our finances and estate plans with anyone other than our partners. But your loved ones are going to find out about your finances eventually. The question is, are you going to make that easy for them or difficult? If you love them, make it easy.”

From Lesson 19 with Jennifer Rozelle: “Jenny’s point that beneficiary designations “trump” other aspects of an estate plan, such as what’s in a will, should be in bold type and underscored because so many people miss this. Your first step if you’re setting aside time for estate planning tis to ensure that your current beneficiary designations sync up with your wishes and your current situation. If you go on to create a full-fledged estate plan, make sure that your beneficiary designations reflect that plan.”

How I Retired

Essentially, I’ve retired twice now. Once from my physician job and a second time from running this website, although I do obviously make some contributions here. I slowly phased out of my job as an anesthesiologist by working part-time for the better part of my final two years.

I’ve done something similar with the blogging job, handing the reins over to new physician ownership to handle most tasks, while still writing at least once a month and remaining somewhat active in our Facebook groups.

Have I followed the other recommendations in How to Retire?

Well, I do plan to delay Social Security to age 70, assuming that there are no major changes in the program or my health in the next 20 years. It makes sense for my wife to collect earlier based on Mike Piper’s Open Social Security calculator, as she’ll be collecting on half of my full retirement age benefit.

There is some structure to my days. My wife and I take turns getting up with the kids before dawn to see them off to school. I have a daily workout routine, I run a fair amount, and in the winter, I’m generally skiing and/or curling most weekends. We do some volunteering, primarily related to our kids’ schools and activities, and we donate to causes we care about. I don’t feel we’ve been lacking in purpose or things to do.

We’ve done some basic estate planning and have living wills, but these could be more robust and will need to be updated. There’s been so much in flux in terms of properties, startup investments, and business dealings that I’ve been waiting for things to settle and be more permanent before revisiting the asset protection and estate planning piece. There’s certainly room for improvement here. However, I’m fairly risk-tolerant, and the odds of both my wife and me passing away in the immediate future are quite low [knocks on wood].

I do have some alternative investments, but the bulk of my portfolio is built around the concept of an idea that resembles a three-fund portfolio. I’ve kept things relatively simple, and as smaller investments go full circle, I continue to simplify.

In terms of saving, in hindsight, it’s fair to say that we oversaved. Another way to say the same thing is that we “underspent,” but I don’t feel that we’ve been lacking for anything we’ve wanted. I’m making some headway in being comfortable spending in ways that felt frivolous in the past.

The combination of inflation in the price of goods and services with the concomitant inflation of the size of our investments makes spending an unnecessary $20 or $100 more tolerable. Even a few thousand extra dollars, like the change in our auto and umbrella insurance after adding a teenage driver, isn’t a big deal in the grand scheme of things.

In terms of setting goals or defining a successful retirement, I don’t have the clearest vision. I’ve checked off some boxes by running a couple of marathons, traveling all over the world with our kids, and building a home where we can age in-place quite well. I’d like to be a reliable husband, father, and friend and have a positive impact on my community. I suppose that’s good enough for now.

I think of the present as the first chapter of our retirement — retirement with kids. Subsequent chapters will be defined first by an empty nest, where our travels take us, and unknowable events that will undoubtedly change our approach to retirement life in the future. The blank slate is exciting, a little bit frightening, but quite welcome.

How to Retire Well

I feel that I’m retiring reasonably well, and I’m grateful for the teachings above to help me evaluate and plan for the forthcoming chapters in retirement.

For another 90 or so pearls of wisdom and the complete conversations with a fine collection of thought leaders around the topic of retirement, pick up a copy of How to Retire: 20 Lessons for a Happy Successful, and Wealthy Retirement at your nearest library, bookseller, or online retailer. You’re certain to come away with new knowledge and insights that will positively impact your retirement plan.