Thrive in Your First Year of Retirement
As a record number of Americans turn 65, staying flexible — in your finances and your plans — will be key to achieving your best post-work life.
After several decades as a serial entrepreneur — launching computer magazines in the ’80s and hobby magazines in the ’90s, then running conferences for publishers for two subsequent decades — Carl Landau retired in 2019 at age 64. "I finally felt fatigue," says Landau, who lives in Sacramento, Calif. "I always had so much enthusiasm for it all and realized that I had been doing this for a long time."
That first year of retirement, though, proved challenging. Landau and his wife planned a trip to Portugal for March 2020 — the month and year the world practically shut down thanks to the COVID-19 pandemic. With travel canceled and life on pause, Landau did what entrepreneurs do: He launched a new venture, creating a wry, weekly podcast looking at life and identity post-career that he called I Used to Be Somebody.
Within months, the project had morphed into a second career. "I realized I had built another full-time job," says Landau, adding that he found he had little time to pursue his passion for pickleball, one of the activities he’d most looked forward to in retirement.
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So Landau recalibrated again. He scaled back production of the podcast and a companion newsletter to once a month, and he now averages some 12 hours a week at work. The rest of his time is reserved for socializing and recreation (pickleball!). Looking back, he recommends that newbie retirees bake flexibility into their plans to accommodate shifting priorities and unexpected experiences.
"There are going to be ups and downs, particularly if you worked really hard for 40 years and all of a sudden you’re not doing that," he says.
Landau’s story is less a cautionary tale than a template for what comes next, as millions of newly minted retirees are now learning. The post-career years, especially in the beginning, are an ongoing experiment. "No matter how prepared for retirement people are, they are unprepared," says certified financial planner Ross Levin, cofounder of Accredited Investors Inc., a wealth management firm in Edina, Minn.
The impact of "Peak 65"
Thanks to the aging of the massive baby boom generation, the ranks of first-time retirees looking for financial security and purpose in the next stage of life are historically large right now.
Between 2024 and 2027, a record number of Americans will turn 65 or will have already celebrated that milestone birthday, including 4.1 million this year and about the same number next year — a cohort known as Peak 65. All boomers will be at least 65 by 2030.
Many of these freshman retirees understandably face the transition to their next chapter with some trepidation. The percentage of workers who feel confident that they have enough money to live comfortably in retirement fell by 6 percentage points from 2025 to 2026, to 61%, according to a recent survey by the Employee Benefit Research Institute (EBRI) and Greenwald Research.
Among the concerns stoking worries about finances in retirement were inflation, debt, healthcare costs and housing expenses, as well as doubts about the future financial viability of Social Security and Medicare.
Adding to the anxiety: Many near-retirees haven’t spent much time planning for what they will actually do once they’ve put a full-time career behind them. That’s the key takeaway from a 2025 survey by the Financial Planning Association and the Journal of Financial Planning. About half of the financial planners surveyed said their clients were financially prepared to stop working, but only 11% said the people they advise were emotionally prepared for the lifestyle adjustments that retirement entails.
If you’re looking ahead to retiring soon or have recently embarked on the retirement journey, you want to make sure you have both parts of the process covered. Experts recommend these steps to ease the transition from full-time work and to ensure that you flourish in this next chapter.
Rethinking what retirement looks like
Part of the challenge you face as a new retiree is that the definition of this stage of life is changing, as people generally live longer and in better health than previous generations. Yes, the word retirement still typically signifies the end of a long career. But individual paths diverge wildly from there these days.
The classic vision of retirement as full-time leisure and relaxation remains an option. Increasingly, though, many retirees take on part-time jobs, gig work or even encore careers. Some become passionate volunteers or dedicated hobbyists; others go back to school. Some embrace an active role as grandparents or become caregivers to aging loved ones. Often, retirees pursue a mix of these roles that evolves with age.
What’s right for you? The beauty of a long retirement is that you don’t have to figure it all out from the jump or stick with a single vision. It helps, experts say, to view the first year of retirement as a period for gathering information that will help smooth the transition to this next chapter and build a strong foundation — financially, socially and emotionally — for a comfortable, meaningful retirement.
"The first year is a test year," says CFP Lazetta Rainey Braxton, founder of the Real Wealth Coterie, a wealth management firm in New Haven, Conn.
The key, experts say, is to be willing to experiment and to seek out pursuits that offer purpose, keep your body and brain active, and help you maintain social connections. You also need a good idea of how much you can safely spend to make those things happen.
In other words, you need both a purpose plan and a financial plan at the beginning of your first year of retirement. That allows for smarter decision-making and flexibility, helping you adapt as experiences and new data inform your views and the inevitable curveballs come your way.
"If you’re thriving, it’s because you have a personalized vision for what retirement means to you," says Lisa Stornaielo, cofounder of The Future of You, a Boston-based consultancy that helps individuals and corporations navigate the transition to retirement. "Your finances are an important piece.
But what we’ve found is just as important is that people are very clear not only on what they’re retiring from but also on what they’re retiring to, and there’s an intentionality around that."
Treating your first months as a sabbatical
Of course, you’ll need time at first to decompress, exercise, read, and tackle long-delayed home projects or similar tasks. There is immense value in giving yourself permission to relax and enjoy new experiences.
Think of those first few months as the equivalent of taking a sabbatical — a necessary window to recharge mental and physical energies while creating psychological distance from a lifelong work identity.
A sabbatical is temporary; retirement is not. The profound shift in navigating the transition between the working world and retirement comes down to sheer time.
Leaving a full-time career suddenly frees up roughly 2,500 hours each year, calculates executive coach Joe Casey in Win the Retirement Game: How to Outsmart the 9 Forces Trying to Steal Your Joy. "People enter retirement at different ages and with various levels of resources," he writes. "But all new retirees are time-rich."
The core question to ask yourself: How will you invest that newfound wealth of time? What is your purpose? What matters to you? "I encourage people to write some sort of business plan," Landau says. "It doesn’t have to be elaborate. Just list your goals, what you really enjoy doing and the things you don’t like."
Adapting your plan as life happens
Any entrepreneur will tell you that a solid business plan not only increases the odds of success but also accounts for the fact that the blueprint will change multiple times. Take the experience of Joy Norquist, 70, and Ron Wawrzon, 69, who retired — she from a career in insurance compliance, he from working as an operations manager for a small manufacturing company — in 2021 and 2022, respectively.
The Saint Paul, Minn., couple both have pensions, retirement savings and a long-term relationship with a financial planner. They planned to move to Chicago, where Wawrzon is from, but life intervened. Wawrzon faced a health setback (he’s fine now), and Norquist’s mother required months of intensive care following a serious fall. Those initial plans for retirement went on hold.
Meanwhile, the couple discovered part of their post-retirement rhythm almost by accident. One afternoon, for fun, they went to an open house for a condo in a high-rise building in downtown Saint Paul, and they fell in love with the view. The couple moved to the building two years ago. They joined a local walking club, they participate in a weekly study group at a local tavern, and they enjoy movie nights with neighbors and other activities.
Norquist’s mother passed away in late 2024, and the couple spent much of last year dealing with her estate. Now that’s mostly done, but Chicago may no longer beckon and Norquist and Wawrzon are taking their time to decide what comes next for them in retirement. But they view the future with optimism. "We feel like we haven’t really launched yet," Norquist says. "We’re figuring out the rest of our lives from here."
Build your core strategy
As you shift from earning and saving money to spending the fruits of your labor, retirement triggers a cascade of financial decisions, from where to live and how you’ll pay for healthcare to when to start taking Social Security benefits and how much you can safely withdraw from retirement accounts.
Yet only one in four Americans in their sixties has a formal, written financial strategy for retirement, according to a 2025 report from the Transamerica Center for Retirement Studies.
If you’re among them, now is the moment to create a plan — or revisit and update the one you already have. You need realistic data on expenses (needs and wants), liabilities, tax rates and healthcare costs to figure out where you stand and what options make the most sense for your circumstances.
You can work with an adviser (find one at napfa.org, letsmakeaplan.org or garrettplanningnetwork.com) or do it yourself using planning software, such as Boldin (free for the basic version; $12 a month for advanced features) or WealthTrace ($229 a year, standard; $289 a year, deluxe).
Maximize your Social Security payout
Among the most critical decisions to ponder in year one: when to claim Social Security benefits. The earliest you can apply is age 62 and the latest is age 70; the longer you wait, the bigger the monthly payout will be.
For instance, boomers celebrating their 65th birthday this year who wait to file until they hit their full retirement age of 67 — that is, the age at which they’re entitled to 100% of their benefits — will get a monthly benefit that is roughly 43% bigger than if they’d claimed at 62, according to the Social Security Administration. Wait until age 70, and that monthly benefit will be 77% higher than the payout at 62.
Because you can’t outlive your Social Security benefit and the payout is adjusted annually for inflation, the standard advice is to hold off filing for as long as possible — at least until your full retirement age. However, there can be good reasons to claim earlier — if, say, your health is poor, or you’d otherwise need to withdraw too much from savings to pay fixed expenses.
An adviser can help determine the optimal time to claim for your situation, or you can tap online resources for assistance, such as Open Social Security, a free strategy calculator, or planning software such as MaxiFi ($109 a year, standard plan; $149, premier). (For more guidance, see "Perfect Timing: When to Claim Social Security," April.)
Master your portfolio withdrawal strategy
You’ll also need to tackle the puzzle of how much money you can safely withdraw from your retirement portfolio. One common guideline is the 4% rule, developed by retirement researcher William Bengen in the mid ’90s.
It suggests taking out 4% in the first year of retirement (it assumes the portfolio is split roughly 50-50 between stocks and bonds), then adjusting subsequent withdrawals annually for inflation. Historically, Bengen calculated that strategy would ensure you would never run out of money, even in the worst-case scenario for financial markets.
Although the 4% rule is a simple and convenient metric, experience has shown that strictly adhering to it often leads retirees to withdraw less than they can afford to spend, potentially stopping them from enjoying this chapter of life to the fullest. Many experts, including Bengen himself, have revised the initial withdrawal rate upward to the 4.5%-to-6% range.
In his 2025 book A Richer Retirement, for instance, Bengen suggested 4.7% would be a better starting point for withdrawals, and he changed his model portfolio to hold as much as 65% of long-term savings in stocks.
Likewise, CFP Rainey Braxton typically recommends that you withdraw up to 5% the first year — ideally somewhere between 4% and 5% — and possibly a little more, depending on what she calls "the nuance and art of knowing the client’s circumstances."
A popular alternate approach is the bucket strategy, initially developed by CFP and wealth manager Harold Evensky, chair of the Coral Gables, Fla., financial planning firm Evensky & Katz. As Evensky said in a Morningstar interview last year, the strategy was "designed so the client wouldn’t get panicked if the market was falling apart because [they’d know] where the grocery money was coming from."
The basic idea is to set aside enough cash to cover, say, one or several years of living expenses, when combined with Social Security and any other guaranteed sources of income, such as a pension.
Money that you won’t need for several years is then invested in a diversified portfolio of fixed-income securities and equities, which offer the prospect of higher long-term returns but at greater short-term risk. The cash cushion offers peace of mind that you’ll get through the inevitable market slumps without needing to sell depreciated stock or bonds.
Despite the differences between the two strategies, the central takeaway is the same: Spending plans should be dynamic. In essence, the first year of retirement provides a trial run to implement a fluid strategy, allowing you to track your actual lifestyle costs while remaining flexible enough to make adjustments if market or economic conditions or personal priorities shift.
"People think they need to have it all figured out right away," says Andrea Eaton, a CFP at Cornerstone Wealth Advisors in Edina, Minn. "It takes a year to figure out your actual cash needs. It really is a guesstimate initially, and that can be changed up or down. It simply takes time getting used to taking money out versus putting money in."
Discovering your post-career purpose
Newbie retirees often feel unmoored when they are no longer defined by their job and the need to make a living. So it’s important to build a new sense of purpose for your retirement years and have good reasons for getting up in the morning.
"You should be working on what your life will look like before you even retire," Eaton advises. "What is your greater purpose? How are you getting involved in your community? What gives your life meaning beyond working for an income?"
How do you find that purpose now? Stornaielo, who spent 21 years at Fidelity in human resources and executive coaching, warns against getting too caught up in pretentious visions about purpose. She recalls a three-day retreat focused on purpose that she attended while still at Fidelity. The retreat was very serious and high-minded. At the end of it she declared her purpose was to be "the yeast in the bread of life," she laughs. "Whatever that means."
Her purpose mantra now is far simpler and grounded: "Helping people achieve their potential." Also helpful, she says, is not to think of your retirement as the end part of your life. "Don’t get hung up on how much time is left. [The focus should be] what I can do today to feel like I’m making the most of my time."
Finding meaning through community, learning, and giving
For Laura and Ben Cooper, giving back to their community is what’s providing that feeling and sense of purpose in retirement. Laura, 78, a former law professor at the University of Minnesota, became a volunteer teacher in a citizenship program in the Twin Cities when she first retired in 2018.
Along with Ben, 79, a former mathematics professor at Augsburg College in Minneapolis, they’ve since branched out to support a variety of causes that include local arts organizations, environmental groups, nonprofits focused on refugee rights, and their local library system. Freed from the busyness of active careers and raising their now-grown son, they were able to ask themselves, says Laura, "What do we really care about?"
The Coopers manage much of their giving through a donor-advised fund, a tax-advantaged charitable-giving vehicle that works like a personal investment account for philanthropy.
Added benefits of their philanthropic work, they’ve found, are the sense of community and opportunities for continued learning it has given them. They’ve joined outings with Nature Conservancy scientists, attended private theater rehearsals to hear from actors and directors, and learned from experts about international human rights. "Learning is absolutely vital, and we have pretty diverse interests," says Laura.
Conversations with family, friends and acquaintances are a rich resource for thinking about purpose. One technique is to pay close attention to the tasks, conversations and projects that leave you energized rather than drained. Introspection helps, too.
Think back to other major life transitions and see what consistent core values carried you through those shifts. Volunteering, mentoring, taking a course or learning a new skill are activities that also offer useful information.
And some resources can help. Among the books that might provide both inspiration and practical suggestions are: Who Do You Want to Be When You Grow Old? The Path of Purposeful Aging, by Richard Leider and David Shapiro; The Big Shift: Navigating the New Stage Beyond Midlife, by Marc Freedman; and The Second Mountain: The Quest for a Moral Life, by David Brooks.
Evaluating year one to recalibrate year two
At the end of your first year of retirement, Eaton suggests conducting a personal audit.
Ask yourself, What activities brought you the most joy and fulfillment? Which were a waste of time? Are you feeling lonely? Do you need to inject more intentional social interactions, clubs or group hobbies into your life? How is your budget holding up against the reality of retirement? Do you need to scale your spending up or down based on your actual first-year cash flow?
The answers to those questions will help you shape year two of retirement, which in turn will help guide year three. Retirement is iterative by nature — a series of continuous recalibrations. You want to be continuously asking yourself, says Eaton, "What didn’t go well? And how do I want next year to be?"
Know this: Your first year probably won’t look exactly as you imagined it would before you stopped working full-time, and that is perfectly fine. Year one isn’t supposed to be the final draft of your retirement; it is simply the initial run of a grand experiment.
Build a personalized plan with confidence
Retirement is full of important financial decisions, from creating a sustainable withdrawal strategy to deciding when to claim Social Security. A financial planner can help you build a personalized plan with confidence.
Use the Bankrate tool below to connect with a vetted financial planner who can help you create a retirement income strategy that fits your goals:
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
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