Are You Ready for the Emotional Side of Retirement?

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published 14 June 2025

Retirement is often seen as a time of rest and reward, but the transition can bring about significant emotional and psychological challenges.

Shifting from a lifetime of saving to living off those savings is not just a financial adjustment — it’s a mental and emotional one. Understanding the impact of these changes and preparing for them can make retirement not just a milestone but a fulfilling new chapter.

Understanding emotional risk tolerance

One of the first psychological hurdles retirees face is grappling with their risk tolerance in a new phase of life.

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The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

During the accumulation years, stock market corrections often feel like minor setbacks. But for retirees, those same corrections can feel catastrophic.

Consider the difference: When you’re 45, a 20% market decline may seem insignificant with 20 years left to recover before retirement. At 65, that same loss can provoke panic, especially when combined with withdrawals.

Many retirees underestimate how these shifts in risk tolerance will affect them emotionally. Preparing for the “what-ifs” is critical to avoiding unnecessary stress.

What you can do:

Reassess your risk tolerance annually. As you age, your emotional ability to handle market fluctuations may change. Regularly review your investment strategy with your adviser to ensure it aligns with your comfort level.
Create a financial cushion. Having a portion of your portfolio in safe, stable assets can provide peace of mind during volatile times.

Coping with the transition from saving to spending

The shift from contributing to retirement accounts to drawing from them can feel unnerving.

Many retirees worry about running out of money or needing to re-enter the workforce. This fear isn’t unfounded — America’s retirement crisis has left many unprepared for the financial realities of retirement.

What you can do:

Simulate withdrawals before retirement. Practice living on your projected retirement income a year before retiring. This helps you adjust your lifestyle and identify potential budget gaps early.
Develop a “plan B” for extra income. While not ideal, having a backup plan, such as consulting or a part-time job, can provide emotional security.

Building a support team

A strong support system is vital in managing the emotional toll of retirement. Your adviser should be more than a financial planner — they should be a coach, educator and, at times, a therapist.

Frequent communication during the early years of retirement can help address anxieties and build trust.

Choosing the right adviser:

Look for someone who prioritizes relationships and communicates effectively. If your adviser isn’t available to address concerns promptly, it’s time to reconsider your team.
Seek testimonials or speak with current clients to gauge compatibility. An adviser-client relationship should feel like a partnership, not just a transaction.

What you can do:

Ask the tough questions. Does this adviser align with your values? Are they proactive and attentive? If you’re unsure, take the time to explore other options.
Involve your family. Retirement planning affects more than just the retiree. Ensure your adviser is comfortable engaging with your loved ones to create a holistic plan.

Steering around common pitfalls

One common mistake is choosing a financial adviser or team based on familiarity, such as a recommendation from friends or family. While this can seem convenient, it might not always be the best fit for your unique needs.

What you can do:

Focus on expertise over familiarity. Choose an adviser who specializes in retirement distribution and legacy planning rather than one who excelled during your accumulation years.
Prioritize process. Look for a team that offers a structured, step-by-step approach to retirement planning, ensuring nothing is overlooked.

The psychology of market volatility

Market volatility adds another layer of stress for retirees, especially when combined with the fear of running out of money. The 2008 financial crisis is a stark reminder of how quickly portfolios can decline, but having a plan in place can make all the difference.

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What you can do:

Plan for worst-case scenarios. Work with your adviser to model potential downturns and how they could impact your finances. Knowing you’re prepared can alleviate anxiety.
Stick to your strategy. Emotional reactions often lead to poor financial decisions. Trust the plan you’ve built with your adviser, especially during challenging times.

Leveraging emotional and mental health strategies

Beyond financial preparation, retirees should also focus on mental well-being. Retirement marks a significant lifestyle change, which can lead to feelings of loss or identity crises.

What you can do:

Stay connected. Build a strong social network to combat feelings of isolation. Join clubs, volunteer or reconnect with old friends.
Set new goals. Retirement is the perfect time to explore hobbies, travel or take on personal projects. Having a sense of purpose can improve overall happiness.
Seek professional help. Don’t hesitate to talk to a therapist or counselor if the transition feels overwhelming.

The bottom line

Retirement is as much an emotional journey as it is a financial one.

By acknowledging the psychological challenges, building a strong support team and preparing for the unexpected, retirees can navigate this phase with confidence and peace of mind.

America’s retirement crisis may present unique challenges, but with the right strategies and mindset, it’s possible to turn uncertainty into opportunity and create a fulfilling post-work life.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Cliff Ambrose, the visionary behind Apex Wealth, serves as a wealth manager with an innate passion for steering individuals toward enriched financial independence. His journey began with a robust educational foundation in finance and economics, culminating in a degree that set the stage for his financial guidance career. With his start at Metlife, Cliff acquired valuable hands-on experience in the industry, complemented by securing his Series 6 and Series 63 licenses and, later, his Series 65 qualification.