The Best Retirement Advice of All Time
Investing greats, renowned economists, top advisers and other experts share their favorite wisdom, both given and received, about retirement.
Editor's note: This article is the third in a five-part series featuring the best advice about money from investing greats, renowned economists, top financial planners and other experts. Other articles focus on advice about managing money, saving and investing, family finance and the best advice experts have gotten from their moms and dads.
We asked a diverse group of 35 top financial experts — acclaimed investors, advisers, money managers, economists, influencers and more — to share their very best advice with Kiplinger readers. The essential question we put to them: Of all the many recommendations about money you've given or received, what are the best, most meaningful or most impactful tips you want to pass along?
In this article, the third in the series, we feature their advice about planning for and living in retirement. We hope you find the experts' suggestions as smart and useful — and, occasionally, surprising, funny and moving — as we did.
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The best retirement planning advice
Give yourself a steady paycheck.
"Unknown longevity is probably the biggest risk you face in retirement. When you don't know how long you're going to live, it makes it really difficult to effectively plan for retirement and enjoy your retirement savings. If you think you might live to 105, you're not going to want to spend down your savings. So creating a good plan to enjoy what you saved in retirement is really important. Research I did with Michael Finke at The American College of Financial Services strongly suggests transferring some of that risk into more annuitized income — by delaying claiming Social Security benefits, getting a job with an employer pension or purchasing a lifetime income annuity — is a much more efficient way to enjoy retirement than trying to figure out how to spend down a portfolio."
—David Blanchett, head of retirement research for Prudential Financial
Related: How to Manage Longevity Risk in Retirement: 10 Solutions
Save with future taxes in mind.
"My number-one piece of advice for saving for retirement is to do it through a Roth account. I argue with a lot of people who say, 'But I want my tax write-off now!' Sure, you could get a tax write-off today, but you'll be missing out on the benefits of totally tax-free income later. You're far better off in the long run with a Roth."
—Suze Orman, author of 10 personal finance books including The Ultimate Retirement Guide for 50+ and host of the podcast Women & Money
Work with a financial planner.
"In the later stage of life near and in retirement, you can't afford to screw up. Find a really good adviser who you can trust, who's vetted and respected. A fee-only one, who is not selling products. Also read smart financial publications so you understand better what your planner is telling you and whether you should respect it, so you're not just blindly turning everything over to them."
—Ted Benna, benefits consultant, creator of the 401(k) and the Radish Plan, a new employer-funded, tax-deferred savings and rewards plan
Take a conservative approach.
"Too many people early in retirement are too aggressively invested. If we have a big market downturn in the first years of retirement, that's going to affect you for the rest of your life. It's better to be conservatively invested early in retirement, as that gives you more options down the road; having 50% of your savings in fixed-income securities will give you plenty of time to figure the downturn out. But if you're going into retirement with 70% to 80% in stocks and they lose 40% of their value, that's painful, and then the horizon is much shorter to earn it back, too."
—Carolyn McClanahan, certified financial planner and founder of Life Planning Partners
Plan for long-term care.
"Think about if something happens to you as you age and you need long-term care: where you want to receive it, who will provide it, and how you're going to pay for it. Then it's really important that you tell your family what you want. There are different strategies you can employ to help finance long-term care — long-term care insurance, hybrid life insurance, hybrid long-term care annuities. Or there may be assets that you want to set aside to pay for care. But however you finance it, if you don't address the subject, you're making it difficult for your children and grandchildren. Your decision will affect three generations' finances."
—Marguerita Cheng, CFP and CEO of Blue Ocean Global Wealth
Invest in your happiness.
"We often approach retirement like a math problem, focusing on how much we need to save and how much income we can safely withdraw from our investment portfolio. But I think retirement planning places too much emphasis on the numbers, when the ultimate goal is satisfaction. Nobody gets happiness from money. Money is a tool; it's a way to do things that make you happy.
So think not just about accumulating money, but how to spend it in a way that really brings you joy. Only one category of spending has a significant impact: social activities, things like taking vacations with our family or going out to dinner with friends. We have to treat our relationships and health in the same way we do investments, and put effort, time and money into maintaining them. After all, there's no use in having money to afford the dream trips and activities you want in retirement if you can no longer walk around a city or don't have close friends to do things with."
—Michael Finke, retirement researcher and wealth management professor at The American College of Financial Services
Plan your retirement paycheck.
"Pay as much attention to decumulation or making your money last in retirement as you do to accumulation. It's a very, very different skill. To do this, you need to understand how much life in retirement will actually cost you. Your spending before retirement is your best indicator. But because we spend unconsciously, many people haven't looked at the numbers to see if it's sustainable, so tracking your spending is a really important exercise. And many retirees are surprised by how hard and scary it is to actually begin spending their savings."
—Jean Chatzky, CEO and cofounder of HerMoney Media, host of the HerMoney podcast and author of How to Money
Find your retirement purpose.
"Retirement doesn't mean just leisure activities for 30 years — that's not great for anybody psychologically over the long term. Give a lot of thought to ways you can meaningfully and purposefully live out the years of your life where you don't have to work, whether that means still working in some capacity, applying the skills and abilities you built up over your career to causes or pursuits that interest you, volunteering, or starting a nonprofit. Think about what you'll do with your newfound time as you're freed from a boss and schedule, and how to best prepare yourself for this time in life that can be — and is for many people—the most emotionally satisfying."
—Laura Carstensen, founding director of the Stanford Center on Longevity and psychology professor at Stanford University
Delay claiming Social Security.
"There is a strong desire in many Americans to claim Social Security early, to get the money while they can, even though economists have universally recognized that waiting a few years is the best strategy because the increase to this inflation-protected income source is very generous. Fight the social pressure or fear to claim early. You're going to be stuck with that bad decision for the rest of your life."
—Michael Finke
Take some risk off the table as you near retirement.
"As you approach or are in retirement, don't be too aggressively invested. Because if you experience a significant downturn of 20% or more at that stage of your life, it's extremely difficult to recover. So rather than balancing out the stocks in your portfolio with bonds, which are a lot safer than stocks but still have risk, go with a money market fund or certificates of deposit, something with no risk and guaranteed income. It's been 20 years since the last prolonged downturn, but at some point this crazy market's going to blow up."
— Ted Benna
Related: 10 Strategies to Consider When Retiring During a Volatile Market
Don't be overly cautious.
"A very savvy planner gave me some advice about planning for your future using Monte Carlo simulations, which will give you a number that says your probability of success at ensuring you won't run out of money in retirement. Don't aim for 99% probability because that almost guarantees that you will leave money on the table. Instead, aim for 83% success. That will get you to a point where if some event happens and your portfolio is trending down, you can adjust along the way and be taken care of. You don't need a 99% probability of success."
—Teresa Ghilarducci, labor economist and retirement security expert, professor at The New School for Social Research and author of How to Retire with Enough Money
Put safety nets in place
"You're not going to be the same person in your eighties and nineties as you were in your sixties and seventies. We all become more vulnerable as we age, so it's important to plan for that transition and put safety nets in place around financial decisions ahead of time. That can be things like: planning to automate income later in life or finding someone you trust to serve as fiduciary. The worst thing we can do is saddle our kids with figuring out what to do with us when we can't live independently."
—Michael Finke
Devise concrete goals.
"Don't hyper focus on retirement as a concept. Make your goals more tangible. What does retirement look like? What will be fulfilling for you? Shift the retirement conversation from ‘what will you stop doing?' to ‘what are you going to do?'"
—Megan McCoy, certified financial therapist and acting personal financial planning program chair, Kansas State University
Spend the money you've saved when you retire. Really, go ahead.
"Don't forget what money is for: allowing individuals to be able to live the lives they want and leave the legacies they want. Many retirees find spending hard because of loss aversion; it makes people really uncomfortable to see resources that they have worked hard to collect being depleted. But if you're trying to hang on to everything you've got, you're likely not living your life with as much meaning, purpose and satisfaction as you could be if you spent more."
—Laura Carstensen
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.