Retirement planning is no walk in the park. It’s complicated. No surprise that many of us make mistakes that can turn retirement dreams into last-minute panic.

As retirement nears, there are tons of things to think about, like when to take Social Security, how much to take out of your 401(k), creating a spending plan you can stick to and investing your retirement savings. And like the butterfly effect, tiny decisions now can lead to huge, life-altering consequences down the road.

That’s why it’s crazy to go it alone.

A Northwestern Mutual study found that 71% of U.S. adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial adviser.

The value of working with a financial adviser varies by person, but according to an independent study, people who work with a financial adviser feel more at ease about their finances and could end up with about 15% more money to spend in retirement.

But who can you trust for guidance? In the past, you’d have to turn to a stranger and take your chances. But that was then.

These days there are no-cost online services, such as SmartAsset, that make discovering your ideal financial adviser a snap. You fill out a short questionnaire, then get matched with up to three local fiduciary financial advisers, each legally bound to work in your best interests. The process only takes a few minutes, and in many cases you can be connected instantly with an expert for a free retirement consultation.

Definitely something you should do, especially if your savings are $100,000 or more. Meanwhile, here are some of the biggest retirement mistakes — and how to avoid them.

1. Failing to plan is planning to fail

A happy retirement is one that’s stress-free. And how do you eliminate stress? Simple: by having a plan.

When you want to go somewhere you’ve never been, do you get in your car, drive around aimlessly and hope to eventually arrive? No. First, you decide where you want to go. Then you use a map to plot the shortest path to get there.

A financial plan is a map plotting the shortest path to reach your retirement goals. Deciding what you’re going to do, where you’re going to do it, how much it’s going to cost and where the money will come from: all parts of your plan. But what if your plans change as you approach retirement? That’s OK. It’s your plan; you’re welcome to change it.

Does making a plan sound complicated? It is. The investments you choose, income taxes, and your target retirement dates are just a few of the tons of variables you’ll have to consider. That’s why if there’s one time in your life you could use professional advice, this is it. Hiring an experienced, expert guide in the form of a qualified financial planner will keep you from getting lost and get you to your destination.

2. Putting off till tomorrow what you should have started yesterday

According to a recent survey by Bankrate.com, the biggest financial regret is not saving enough for retirement. And why don’t Americans save enough? Because they put it off, saying some variation of, “I’ll wait till I have more money”, or “I’ll start when I get closer to retirement.”

The thing is, the longer you wait, the harder it will be. In other words, starting small but sooner is better than starting large but later.

If you’re behind on retirement savings, a financial adviser may be able to help you catch up and figure out how much you’ll need to invest to meet your goals. In addition to investing for your future, a financial adviser can offer guidance on budgeting and paying off debt.

And while there’s obviously no guarantee, if an adviser can increase your returns, it could make a big difference. Consider this: if you save $500 a month for 40 years and earn an average annual return of 5%, you’ll end up with nearly $725,000. Double that return to 10%, and you’ll retire with almost $2.7 million. That’s a life-changing difference.

Again, there’s no guarantee a pro is going to do better than you could on your own. But the point is that, over time, tiny things can make a huge difference in your life.

3. Retiring too soon or not soon enough

If you are thinking about retiring soon, you may dream of quitting your job and traveling the world. However, before you call it quits, there are a number of reasons you may want to think things over. First, you may live longer than you expect, you may run into unforeseen health issues or face tough financial times that force you to cut back.

That’s not to say you shouldn’t retire early, but if that’s your plan, run various scenarios to make sure your savings are going to cover your expenses during retirement and offer a lifetime of income.

Same with not retiring soon enough. If you’re unsure your savings will be adequate, you’ll worry and as a result, perhaps work longer than you have to. You’re much better off knowing what you have and what you’ll need. Replace doubt with certainty and only work as long as you want to.

4. Hiring the wrong financial adviser

Whether it’s building wealth or securing a comfortable retirement, hiring a financial adviser is a major life decision. Unfortunately, not all are created equal. Hire the wrong adviser and you could end up worse off than when you started.

When it’s time to find someone to assist you, always meet with several planners. Talk to them, ask a similar list of questions and assess their qualifications and advice before making a decision. Ask how they get paid and how long they’ve been in the business. Take your time. And always deal with a fiduciary: a planner who’s legally bound to put your interests above their own.

These days, finding a financial adviser you know was well-vetted doesn’t have to be frustrating or difficult. Start your search with this free financial adviser matching tool, which matches you with up to three qualified financial advisers in under five minutes. Every adviser is vetted and is a fiduciary.

5. Taking too much risk, or not enough

Risk is a funny thing. Take too much and you can lose your savings. But take too little and you can lose purchasing power to inflation.

The money you retire with is money that can’t be replaced. That’s why we lean toward low-risk, low-return investments as we age. But as inflation erodes the value of money, that seemingly safe nest-egg drops in value in terms of what it can buy. Bottom line? Often, taking no risk presents risks of its own.

Investing, both before and after retirement, is about balance: harnessing investments designed to keep your income flowing, inflation hedged and risks manageable. Your strategy will require safe, guaranteed-income investments, as well as some exposure to stocks and other inflation-protection investments.

According to the most recent figures from the U.S. Federal Reserve’s Survey of Consumer Finances, only about 2.5% of all Americans actually have $1 million or more saved in their retirement accounts.

Among actual retirees, only 3.2% have reached the $1 million threshold.

The Million-Dollar Reality Check

According to Fed data, just over half of Americans (54.3%) have retirement accounts, period, and of those, less than one in 20 (4.7%) have reached the $1 million mark. That figure rises to 18% of U.S. households if you include all assets, such as real estate and other savings.

What Most Retirees Actually Have

The median retirement savings for households led by someone between the ages of 65 and 74 years old is $200,000. For those 75 and older, it’s just $130,000.

Why So Few Reach $1 Million

Several factors explain why million-dollar retirement accounts are rare. Income plays the most obvious role, with high-income households typically saving an average of $769,000 compared with just $79,500 for middle-income households.

Education makes a dramatic difference, too. A typical college graduate has three times the median retirement savings as someone who graduated from high school, but not college ($141,700 vs. $44,000, respectively).

Homeownership also significantly impacts retirement savings, with homeowners averaging $303,000 in retirement accounts, more than 2.5 times as much as renters.

Nearly 500K Americans Are 401(k) Millionaires

Despite the overall percentages, there’s been remarkable growth at the top end. Fidelity Investments reports that the number of “401(k) millionaires” reached a record of about 497,000 Americans as of 2024, with nearly 399,000 also having at least $1 million in individual retirement accounts (IRAs)—two groups that often overlap.

The key to reaching these amounts is starting early and contributing consistently over many years—to get to a million dollars, it takes an average of about 27 years, according to Fidelity.

“I’ve seen clients start with six figures of debt and very little assets and eventually reach $500,000 (and more) of net financial wealth,” David Tenerelli, a certified financial planner at Values Added Financial Planning, told Investopedia. That’s easier to reach if you’re a high-income professional, he noted. “But high income is not the only way to financial prosperity; living frugally, investing wisely, and optimizing for taxes are all important ingredients for anyone to accumulate financial wealth.”

The Bottom Line

Having a million dollars in your account on the day of your retirement remains an elusive goal for the vast majority of Americans, with fewer than one in 30 achieving it. In fact, about three-fifths of Americans are afraid they’ll outlive their savings.

For those who are still working, the message is clear: start saving early, contribute consistently, and consider reaching $1 million as being part of a very exclusive club.

With the right financial moves, you can protect your nest egg, reduce stress, and build a bridge towards retirement that will help you realize your long-term goals.

What to Do Right After a Layoff

The first move after being laid off is to step back and absorb what happened. Resist the urge to panic and start withdrawing funds from your retirement account.

“You have to address the emotional part first before you can get into any numbers or findings,” says Crystal Cox, CFP and SVP at Wealthspire Advisors. “Things might look a little bit different, it’s a shift in perspective, but you will be ok.”

Start by assessing your entire financial profile: How much do you have in savings? What expenses can you cut out or cut back on? Is your company providing severance? For how long? Can you claim unemployment? Are there other sources of support available to you?

The goal is to optimize your cash flow before you start using long-term savings. You may even need to take on part-time work or consulting jobs to cover any holes in your finances. This may help you delay withdrawing retirement funds or claiming Social Security. These strategies can add up to thousands of dollars in the long run.

Avoiding Costly Mistakes

It may be tempting to use funds in your retirement accounts when you’re short on cash. But withdrawing from a retirement account, such as a 401(k), before age 59½ can come with taxes and penalties. Even if you can avoid that, you’ll miss out on years of compound growth.

“Another common mistake…is claiming Social Security early, but that might not be the best decision,” said Cox.

You can claim Social Security as early as age 62. But if you collect at age 62, your monthly benefit will be reduced.

However, if you’re able to wait until full retirement age (FRA) to collect, which is age 67 for those born in 1960 and later, you’ll receive a boost in your monthly benefit. Plus, if you’re able to delay past FRA, your monthly benefits will increase 8% for every you wait, up to age 70.

Instead, Cox suggests finding some type of employment that will bridge the gap before you reach FRA. And if you start claiming Social Security benefits early and realize it wasn’t the best move, you still have some leeway.

“You can actually repay Social Security if you change your mind within the first year of claiming it,” she adds.

Rethink When You’ll Retire

Being laid off when you are about to retire may force you to reassess your timeline. It doesn’t mean you can’t retire, but it may change when you retire. Think about working part-time or going into semi-retirement.

It may not be ideal, but it may allow you to transition to retirement in a way that is less stressful and more financially sound. Take stock of your current assets, Social Security income, and reduced expenses. It may turn out that delaying retirement by just a year or two will allow you to retire comfortably.

Navigating Underemployment

Taking a lower-paying job or working fewer hours might feel like you’re falling behind your retirement goals, but you’re still building financial stability.

The most important thing is to remain committed to your financial plan. By reducing spending, adjusting lifestyle expectations, and being consistent with retirement savings, your retirement future is still in sight. You just need to adjust how you will get there.

Retirement savings can get tricky if you relied on contributing to a 401(k), which workplace retirement plans available through your employer. Yet not all employers offer one. If you are in that situation, you still have options—you can consider opening a Roth individual retirement account (IRA) if you’re eligible or a traditional IRA otherwise.

“Assuming you have additional cash flow that you can still put to work, IRAs are a great option,” Cox says. “Especially Roth IRAs, if you’ve got income to support it.”

Navigating Healthcare and Benefits

Healthcare is one of the most challenging and stressful parts of being laid off. COBRA can be an option in continuing your healthcare plan from employment, but it can pricey—while your employer may have paid a portion of the premiums in the past, you may now be on the hook for their portion of the premium as well as your own, plus a 2% fee.

Take the time to compare it against health plans on the Health Insurance Marketplace. Many people may qualify for subsidies, which bring down premium costs.

If you’re 65 or older, look into how and when to sign up for Medicare to avoid late penalties.

The Bottom Line

Getting laid off close to retirement can be difficult, but it doesn’t mean your dreams of retirement are shattered. With some careful planning and adjustments, such as cutting costs, delaying withdrawals and Social Security, and taking on part-time work, you can still achieve a comfortable and secure retirement.

OPINION: Looking back, when I was a kid my parents got me involved in a lot of activities after school, including tennis, piano lessons, elocution lessons (now called speech and drama), rugby, and last, but by no means least, Cubs and Scouts.

It’s fair to say some of those activities didn’t work out too well, but others taught me some great lessons that are still with me today. One of the key messages from my scouting days was “be prepared” a theme taken from the founder, Lord Bayden-Powell, and which originated more around being attacked by your enemies than thinking about retirement, but it’s as good an analogy as I could find for this topic.

Retirement is a funny thing. It seems far off but, before you know it, it’s just around the corner and you are wondering how you got here. Well, as Talking Heads state, it’s once in a lifetime (if you are lucky to get there at all) and being prepared for the big R is something we all need to think about, even before you are ready to do so.

In the past, a lot of jobs were incredibly physical and there came a time when workers’ bodies, not their minds, would tell them to stop. So, back in the day, many people didn’t have a choice. Both my grandfathers died in their late 60s because they worked in the mines and the coal dust in their lungs eventually got to them.

While there are still a number of physical jobs here in Aotearoa, the majority of Kiwis aren’t facing anything much more dangerous than the risk of paper cuts or repetitive strain injury, neither of which is too life-threatening. So, over the past 50 years or so, we are generally living longer, which is a great outcome for many.

We have all seen inspirational stories of people reaching into their 90s and even 100, doing exceptional things, and thinking ‘wow, how cool is that?’ But most of us will slow down before then – at best we might hope for 20 more summers if we retire at 65, and they might not all be sunny affairs. So, it’s a good idea to plan how to make the most of them while we can.

Retirement nest eggs

There are a heap of checklists and plans you can follow around how much money you’ll need in retirement. But have you thought about what else is important to enjoy the journey, given we are all going to the same destination no matter how rich we are?

Here are five ideas to help you start working on the other stuff:

Write down the things that are important for you to do now and what you want to continue doing when you stop paid work

For example, I want to play tennis into my late 70s. So, what do I need to do to achieve that? Well, keep playing for a start, maybe make time to get regular lessons again, and keep as healthy as I can along the way, without sacrificing the treats. Chocolate comes to mind for me here. It might mean I have to walk more (which I hate) but, as they say, if you don’t use it you will lose it.

Work out how you will maintain purpose and relevance when you leave your job or career

I have seen many incredibly successful people hit the retirement wall and struggle to get over it. Being out of sight, out of mind is challenging. When you are used to the phone ringing or people coming to you with problems or challenges at work, it can be hard to adjust when you leave. The phone stops ringing, people don’t need you and your perceived value goes away.

Before you get there, think about activities, both paid and unpaid, that you could explore or plan for when you make that decision. It could be sitting on a board or two; it might be getting involved in your local community and using your work and life skills to help others; or it could mean just working fewer days.

Write down a list of things you have always wanted to do but never had the time to complete

It could be as simple as driving along in the countryside and stopping off at that small town or village that you never had time to explore, or a big ticket item like going overseas to see the northern lights in Iceland. It might mean spending more time with family and friends or taking up a new hobby. Don’t forget to discuss the list with your partner or family as well. Letting them know helps them plan a little as well.

Have a chat with a friend, colleague or family member who has already retired

Ask them how they felt when they made that decision (or had it made for them). What were their fears and hopes? What did they wish they had done more of before getting there and their biggest regrets?

Enjoy the journey and understand the benefits of decumulation

I know I wasn’t going to talk about money but, while it’s not everything, (my mum always said to me if you don’t have your health, you have nothing) it does provide you with choices. They key is knowing how much you need to be happy. That’s like asking someone how long is a piece of string.

Sit down and do your own numbers, but take into account superannuation, KiwiSaver and other investments, even your home or other assets you might have. Another option might be to downsize your house or live in a different area and release some capital.

The worst thing that could happen to me is I work another seven years, which would mean I would have worked 48 years without a break, only to have an accident or health issue that robbed me of all the experiences I had put off when I thought I would have more time to enjoy them.

I’m not the fittest fellow it has to be said, but I have caught myself recently thinking, while standing in the mosh pit in front of a live band at Auckland’s Powerstation, how much longer will I find this enjoyable? Ages I hope, but there will come a time you might find me at the back of a concert, smiling away, knowing I did it for as long as I could and not regretting a minute of it.

For retirees on fixed incomes, setting and sticking to a budget has never been more critical. Even though income is limited, many expenses are not. Health costs, for example, can be wildly unpredictable for people over 65. Rising prices of consumer goods is also putting pressure on older adults’ wallets.

If the past is any predictor of the future, there’s lots of budgeting work to be done. When asked what financial challenges they faced in 2024, 28 percent of Gen Xers (ages 44 to 59) and 14 percent of boomers (ages 60 to 78) said they took on debt, and 19 percent of Gen Xers and 13 percent of boomers said they depleted their savings, according to a survey by Credit Karma, a consumer financial platform.

What to do? First and foremost, craft a budget for 2026. “It may sound obvious, but everything else is based on that,” says Courtney Alev, a consumer financial advocate at Credit Karma. “Setting a budget can help you avoid a lot of financial mistakes and bad habits.”

Here are 13 retirement budget-setting tips for 2026.

1. Estimate your income

It’s impossible to set a budget without knowing precisely how much money you have coming in, says Trent Graham, program performance and quality assurance specialist at Greenpath Financial Wellness, a nonprofit organization that provides free budget consultations to those in need of assistance. To do this, you trace and project all sources of where your cash will come from over the next year. This includes Social Security payments, pension payments, any work income and income from investments.

2. Calculate your expenses

The best way to do this is to go through your bank and credit card statements and categorize your expenses like housing, utilities, groceries, health care and discretionary spending such as eating out and travel, Graham says.

3. Use a budget checkup tool

The National Council on Aging offers an online budget checkup tool that’s specifically designed for adults 65 and older, says Genevieve Waterman, an aging services program specialist at the Administration for Community Living, part of the U.S. Department of Health and Human Services.

4. Use a benefits checkup tool

Regardless of your financial situation, it’s smart for older folks to educate themselves about any benefits for which they might qualify, Waterman says. You can research your benefits by using the council’s free online tool, BenefitsCheckUp. Americans leave more than $16 billion in government benefits for which they qualify on the table every year, she says. For example, she says, the tool can help users find local programs that provide financial assistance to older adults who are struggling to pay their property taxes.

5. Set and stick to a spending limit

Alev advises that after you have figured out all of your essential costs, you add up to 20 percent for things that include unexpected costs, savings and paying down existing debt. She generally recommends a budget that designates 50 percent toward essentials, 30 percent for “wants” and 20 percent for unexpected costs.

6. Limit credit card debt

More than half of Gen Xers (ages 45 to 60) and over 2 in 5 boomers (ages 61 to 79) carry a credit card balance from month to month, according to a Bankrate study. Interest can add up quickly, with the average credit card rate clocking in at 23.96 percent in December 2025, according to a LendingTree study of over 200 credit cards.

The biggest financial trap that older Americans typically get into is using their credit cards as supplemental income, Graham says. “If you use your credit card, make certain you have the funds available to pay it off at the end of the month,” he says.

7. Put bills on autopay

To avoid missing any bill payments and harming your credit score, consider putting your recurring bills on autopay, Alev recommends. This includes utility and Internet bills, as well as bills for auto, home and life insurance. Virtually every bank has a customer service line that can walk you through how to set up autopay, she says. Set up the autopay for at least five days prior to the bill’s due date, she suggests.

8. Freeze your credit

With so many financial scams targeting older Americans, many financial experts recommend placing a hold, or “freeze”, on your credit with each of the three major credit bureaus: Equifax, Experian and TransUnion. A freeze will stop fraudsters from opening credit cards or other credit accounts in your name, Alev says, safeguarding your credit score.

A security freeze doesn’t completely block access to your credit history. Your existing lenders can still access it, and so can employers, landlords and insurance companies if you’re seeking a job, trying to rent an apartment or applying for a new insurance policy.

9. Plan for unexpected health care costs

Unexpected health care costs are where most older Americans fail in setting up annual budgets, Graham says. So it’s critical to have ample emergency funds put away specifically for health care costs, he says.

10. Trim your subscription services

Review what subscription services you are paying for monthly and then determine which ones you are actually using and which ones you can drop, Alev says. This includes everything from streaming services to gym memberships to newspapers and magazines. According to a 2024 YouGov survey, more than half of U.S. adults are paying for subscriptions they don’t use.

11. Review your insurance policies

The National Council on Aging encourages older consumers to review their insurance plans annually. Many insurance providers offer “senior” discounts, as well as “paperless” discounts for enrolling in online billing, Waterman says. It’s also worth shopping around to compare quotes, she adds.

12. Order takeout less often

Americans order delivery 3.7 times a month on average, spending roughly $1,566 annually. Depending on your habits, reducing how frequently you order in could help lower your expenses significantly. “A couple of extra food deliveries per month can almost double your food budget,” Alev says.

13. Leverage “senior” discount programs

Older folks pass up potentially hundreds of dollars in savings every year by failing to take advantage of discounts for older consumers. Many grocery chains offer them, Waterman says. For example, on Thursdays, through its Club 60 program, Harris Teeter offers VIC card members age 60 and older discounts of 5 percent. A number of major retailers, such as Kohl’s, Michaels and PetSmart, also offer discounts to older customers.

Buffett’s advice can become even more valuable if you’re trying to protect your nest egg as you get closer to retirement. Here are some highlights from the legendary investor.

Invest in yourself

You can grow your net worth by investing in the stock market, but one of the most important investments is in yourself. Learning new skills can lead to a higher income, which allows you to earn more.

And taking care of your mind and body can make you more energetic and productive in the workplace, and help you avoid some of the high costs of health care.

Keep it simple

Buffett isn’t a fan of complexity; he says to keep your investment strategy simple. Instead of picking stocks and staying on top of the latest news, Buffett encourages most investors to buy low-cost S&P 500 index funds.

These funds give investors exposure to 500 of the largest U.S. companies. When a stock underperforms (or no longer meets the index’s criteria) it gets removed from the index in favor of another company. It gets harder to recover from significant losses in the market as you get older, which makes index funds even more valuable for older investors looking for diversification.

Stay calm

One of Warren Buffett’s most famous quotes is, “Be fearful when others are greedy, and greedy when others are fearful.” Investors who panic during market downturns often end up selling their shares to patient investors who enjoy the ride to record highs.

Any investor can benefit from ignoring the news cycle and focusing on the long term. But doing so can be even more important for people who are approaching retirement, since they won’t have as much time for their portfolio to recover from downturns.

Use the moat principle

Buffett looks for companies that have what he calls “moats”: competitive advantages that make it more difficult for other companies to keep up. You can develop a moat around your personal finances as well to make retirement more feasible when the time arrives.

High-interest debt can be a moat killer for people who are setting their sights on retirement. Paying off this debt, cutting expenses and investing more of your money will build your financial moat.

Become a long-term thinker

One of the key factors to Buffett’s success is his long-term thinking. Buffett focused on where stock prices would be in a few years instead of where they are today. He implemented strong financial habits and ignored short-term noise that made other investors panic.

Patience, simplicity and discipline define Buffett’s investing approach.

However, approximately 10,000 boomers turn 65 every day. While we each have specific goals, ideas and financial circumstances, there are some things that apply to us all.

Here is some exceptional advice for both the average and extraordinary guy, gal or duo as you transition to retirement.

1. Get the Big Universal Decisions Right

As you transition to retirement, almost everyone will make a lot of critical decisions including, when to stop working, when to start Social Security, where to retire to and more.

Be thoughtful about your choices and try out different scenarios — especially if you do not have significant savings. These decisions can have a dramatic impact on your quality of life in retirement:

• Working a little longer is a triple treat: You earn more income for a longer period of time. You can save more. You can delay tapping into existing savings.
• Where will you retire? If you own a home, it could save your retirement. Consider if and how you might tap into your home equity.
• Delaying the start of Social Security can add almost $100,000 to your bottom line. Compare different Social Security start ages to figure out the best time for YOU to start to bring in the most money over your lifetime.

2. Tiptoe Into Retirement Instead of Jumping Right In

Retiring used to be a big event with parties, gifts, an abrupt end of work and the beginning of a lot of free time. However, these days more and more people are switching to retirement jobs or working part time before they quit the labor force entirely.

Other ways people tiptoe into retirement include:

• Taking a long vacation or sabbatical to recharge instead of retiring.
• Trying out (renting in or spending time at) a retirement destination, before packing up and moving.
• Making sure you can live on the budget you need to stick to in retirement.

3. Think About Passive Income

Passive income is exactly what it says it is — income that you earn without very much effort. The most popular (and perhaps profitable) form of passive income is a real estate investment.

However, you don’t necessarily have to be able to afford an apartment building to benefit from passive income.

4. If You Have Savings, Think About Your Goals and How You Are Invested

There are a lot of different philosophies about how people approaching and already in retirement should be invested. Some of the advice you hear includes:

• Your savings should be held in low-risk (and probably low-return) investments.
• Preserve your capital and live off interest.
• Think about systematic withdrawals so that your income from investments remains steady over your lifetime.
• Make sure your investments can grow to keep pace with inflation.
• Focus on income from investments, not asset growth.

The contradictory and sometimes irrelevant advice can be very confusing. The reality is that there is no one-size-fits-all all approach for retirement investments.

The best investment strategy for you will depend on the value of your assets, how much income you have from other sources, your monthly expenses, your goals for retirement, your desire for leaving an estate and more.

5. Prepare for a Long Haul and Set Up a Long-Term Budget

Retirement can be a long endeavor. If you retire at 65, you could easily spend 30 years enjoying life.

When you retire, you are agreeing to live off relatively fixed finances. As such, you really need to know how much you are going to spend and when.

You will want to think about how your spending levels might change over time. Most people spend a little more when they first retire. Then, less as they get a little older. And finally more — mainly on health care — near the end of life.

When thinking about your retirement budget, you also want to include any big one time expenses you might incur for things like education or travel.

6. Consolidate and Simplify Accounts

If you have not already done so, the transition to retirement is a good time to consolidate your savings and banking accounts to simplify your money management.

Too many people enter retirement with old 401(k)s and IRAs. Having multiple accounts can be difficult to manage and it may increase the fees you are paying.

A few tips for consolidating your accounts:

• Ask a lot of questions about fees.
• Consider your investment options.
• Do rollovers VERY carefully to avoid withdrawal penalties.

7. Think About Friends and Family

With so much to think about as you transition to retirement, sometimes the most important parts of life like friends and family can get a little lost.

Social connections are one of the most important factors for your emotional and even physical health. And many people really miss daily interactions with people when they stop working.

As you think through your retirement plans, be sure to factor in your loved ones.

• Will your retirement-lifestyle decisions enable you to maintain your friendships?
• Do you have a plan for seeing people on a regular basis?
• If you are relocating, how will that impact your relationships?
• Will your children need or want financial support?
• Will they contribute to your retirement finances or long-term care?

8. Start a Retirement Club

Have you ever benefited from networking for work? What about when you first had kids? Weren’t things a lot easier when you had other parents to talk with about diapers and being up in the middle of the night?

Wouldn’t it be nice to be able to chat and commiserate and brainstorm about retirement with your friends?
If this sounds appealing, maybe you could set up a retirement club — kind of like a book club, but you discuss retirement topics instead of the latest bestseller. Possible themes for each meeting could include:

• Around-the-room sharing about what is good about your retirement plan and where you could use some help.
• Bringing in an investment advisor to talk about your options.
• Discussing different Social Security options.
• Sharing retirement articles in advance of meetings and discussing what you read.

Research into financial literacy has found that your peers can have a huge impact on your success. In the same way having a workout buddy gets you exercising more, discussing finances with friends can be motivating.

9. Write or Update Your Estate Plans

Did you know that you need more than just a will? The will is important, but probably of bigger consequence to your own well-being are your medical directives.

What are your plans for a catastrophic medical event? What do you want to happen if you need some kind of long-term care?

Consider the different estate planning documents you should have on hand.

10. Don’t Be Afraid to Have Fun and Be Happy

There is a lot to worry about as you transition to retirement.
Research from Merrill Lynch, “Leisure in Retirement, Beyond the Bucket List,” finds that most people have anxiety leading up to retirement, but find that once they take the plunge, they are very happy.
If you are worried about finances, dig deep and prioritize what is important to you. Keep your focus on your priorities and make sure you can do those things.

Just make sure that you are enjoying your time now, not only looking forward to the future.

11. Plan for How You Will Spend Your Time

Many people focus on the financial aspects of transitioning to retirement. However, it is really important for you to plan your retirement lifestyle. Retire to something, not just away from work.

Here are a few ways to find what to do in retirement or afford the most popular retirement activities:

• Ideas for what to do in retirement
• Retirement travel ideas, including tips for for retirement travel on a budget.
• If you are worried about paying for rounds of golf, maybe work part time at the course to subsidize your hobby.
• Want to see the grandkids more? Can you move closer?

Still worried? Studies find that having a retirement plan helps alleviate the stress.

For years, investors have followed the 4% Rule, which assumes investors withdraw up to 4% of your retirement during the first year and subsequently adjust it for inflation.

But Bill Bengen, author of “A Richer Retirement” and creator of the 4% rule, makes clear from the start that changes are here to stay. Bengen tells Investor’s Business Daily’s “Investing with IBD” podcast that when he began his research, he focused on just two investments: U.S. bonds and U.S. large company stocks.

He now says the ideal withdrawal is now 4.7%, since his new research takes five other asset classes into considerations like small caps, international stocks, mid-caps, micro-caps and treasuries.

Here are four retirement planning tips from the creator of the 4% rule.

Take The ‘Free Lunch’

Never leave money on the table. Bengen says a “free lunch” is a way to increase your withdrawal rate without taking on additional investment risk. This is achieved through diversification, increasing the overall return of a retirement portfolio as different assets peak and trough at different times.

One method of diversification through rebalancing, for instance returning your portfolio to its original allocation ratio between stocks and bonds and reducing risk.

Bengen says another method is to favor small- and microcap stocks, the two highest returning asset classes based on past data.

Don’t Make Your Retirement Portfolio Too Broad

Bengen says it’s still a good idea to add a variety of asset classes to your retirement portfolio. He points to assets like gold, which have done particularly well recently for investors.

But a diverse portfolio takes careful management to stay profitable. Too many makes the portfolio complicated to manage, ultimately working against the investor. “It’s like a chef preparing a sauce,” Bengen said. “You put too many ingredients in, you’re going to ruin it.”

“Put just the right amount and the right type to come out with your best results.”

Plan Your Retirement Portfolio For A Longer Life

Like planning for an expedition or even a long trip, always give yourself a bigger margin of safety than you expect. “You can look up your life expectancy on the internet,” Bengen said.

“I’d recommend your planning horizon be at least 30% to 40% longer than that, maybe out to 40 years to give yourself a margin of safety, in case you live a lot longer than you figured you would.”

For the ambitious who hope to retire early, Bengen says to be aware that the rate of withdrawals will be lower dueto a longer time span — but not by too much. “The decline slows as you get longer and longer horizons, and eventually just about stops,” he said. “It’ll hit a floor if we’re at 4.7% for a 30-year horizon, then a 70-year horizon might be 4.1%.”

“Those folks who retire at 25 have something working for them there,” he said.

Remember, The 4.7% Rule Is The Worst Case

Bengen says the 4.7% withdrawal rule was developed for a retiree who began collecting in October of 1968, one who was walloped by the 1969-1970 recession and then faced over a decade of very high inflation.

The rule was meant for the worst-case retirement planning scenario.

“We’re not in those right now,” said Bengen. “We have high stock market valuations, which is half the equation, but inflation is at least for the time being, reasonably moderate.”

“I don’t think we have to look at anything as low as 4.7% today.”

Rising living costs, high-interest debt, inflation, and other economic factors have delayed financial planning for many hard-working professionals, leaving them wondering how they’ll be able to achieve their eventual retirement goals.
Whether you started saving later in your career or found yourself unable to contribute as much as you’d like in recent years, the good news is that you can regain ground and catch up.

Saving for retirement is becoming more difficult

As more Canadian workers find themselves living paycheque to paycheque and sinking into increasing consumer debt, the idea of a traditional retirement is fading away.
Sixty-one per cent of Canadians currently fear that they’ll outlive their retirement funds, according to a late 2024 study from CPP Investments. Additionally, of those surveyed, only 49 per cent believe they’re currently saving enough to reach their long‐term retirement goals.

Healthcare of Ontario Pension Plan’s (HOOPP) 2025 Canadian Retirement Survey revealed that 59 per cent of working participants believe they’ll never be able to retire based on their current rate of savings, with many planning to rely on the sale of their home to be able to fund their future retirement.

HOOPP also mentions in a 2024 study a shocking stat: four in 10 Canadians have less than $5,000 in savings, which I explain in depth in this video about the growing retirement crisis in Canada.

Tips to catch up on your retirement savings

If your savings aren’t where you’d like them to be, you’re not alone. Realizing the problem is only the first step. Next, you need to develop an action plan to start catching up. This may involve making a few sacrifices, like picking up extra work or cutting down on discretionary spending.

Once you’re able to create a consistent pattern of saving, though, your mediocre savings will eventually snowball into something worthwhile.

1. Reassess your retirement goals and timeline

Before you can get back on track with your retirement savings, you need to know exactly where you stand. Start by reassessing your retirement goals and calculate how much you think you’ll need to maintain your current lifestyle expenses (or your goal lifestyle).

Some retirees entertain the idea of living more comfortably and luxuriously in their retirement, while others may plan to downsize into a smaller home and live more humbly. While both of these are viable options, you should begin putting together an estimated monthly/annual expense list of your desired retirement lifestyle.

During this process, you may discover that small adjustments like delaying retirement by a few years, downsizing your home, or working part-time through retirement can significantly improve your outlook.

2. Find ways to grow your income

While cutting expenses is a common financial tip, growing your income can often have a much bigger impact on your long-term financial health.

Instead of focusing solely on where you can trim spending, consider how you might bring in more money. Even an extra $500 a month adds up to $6,000 a year — enough to fully fund your TFSA, contribute to your RRSP, or pay down debt faster.
Here are some questions to ask yourself:

• Can I take on a freelance project or part-time contract?
• Is there a skill I could turn into a small business or consulting service?
• Could I ask for a raise or apply for a higher-paying role?
• Have I been putting off an investment or side hustle idea?

Increasing your income gives you more flexibility. It lets you improve your financial future without needing to shrink your lifestyle. When you focus on earning more, you open the door to new opportunities and not just new restrictions.

3. Make contributions non-negotiable

Another way to simplify your retirement savings is to make it non-negotiable. Set up automatic direct deposits into your retirement savings/investments on each payday. With this method, the money comes out automatically, before you ever have a chance to think about it.

This method will also force you to better manage your discretionary spending and living expenses, as you’ll have to make do with what’s left over.

4. Find a way to deal with high-interest debt

Credit card interest rates are astronomical today. If you’ve maxed out your cards, chances are that you’re flushing hundreds of extra dollars each month down the drain on interest fees alone, with very little going toward your card’s principal balance.

One of the best solutions here is to apply for a lower-interest credit card debt consolidation loan. These loans will allow you to combine your high-interest debt into a single lower-interest loan. This will save you on interest payments in the long run, leaving you with more money that you can divert into your retirement savings.

5. Maximize your tax-advantaged account contributions

Finding ways to reduce the amount of taxes you pay each year is a great way to end up with additional funds you can put toward your retirement. I encourage people to maximize their annual contributions to their, and to use it as a source of future retirement income.

If you have a job that matches RRSP contributions, this is another great way to build your retirement savings as well, since it’s essentially free money.

Final thoughts

There are two main ways to start saving more: decreasing the amount you spend and/or increasing the amount you earn.

Picking up a part-time side hustle or asking for a raise are great ways to come up with extra money that you can invest. At the same time, finding ways to reduce your lifestyle expenses, limit some of your discretionary spending, or lower your high-interest debt will also leave you with money left over.

The key is to find a balance of earning and saving more that fits into your current lifestyle and allows you to stay on track with your goals.

The newly released 2026 Planning & Progress Study by Northwestern Mutual shows a growing sense of financial security across every generation. While the official “magic number” for a comfortable retirement in 2026 won’t be available until later this year, recent trends are encouraging.

In 2025, that target dropped to $1.26 million, a significant $200,000 decrease from the $1.46 million reported in 2024. While the bar is lowering, this seven-figure goal remains a daunting hurdle for millions of Americans.

According to Clever Real Estate’s 2026 Retirement Statistics Report, retirees believe they will need an average of $823,800 in savings and investments for a comfortable retirement. Bankrate’s 2025 Retirement Savings Report, released in October 2025, reveals that about one-third (34%) of workers think they’ll need more than $1 million. This coincides with Betterment’s Retirement Readiness Report, which showed 48% of U.S. workers said they’d need at least $1 million.

Facing such seemingly overwhelming goals, 52% of non-retired middle-class Americans expect to retire after age 65 or not at all, per a 2025 Transamerica report.

Consumer spending decreases significantly as you age. To know how much you need to save for retirement, it’s important to know what your spending will look like once you retire. Consider these nine budget-line items you’ll likely spend less on in retirement, then check out our companion article on Nine Things You’ll Spend More on in Retirement.

1. You’ll spend less on commuting

Although some adults age 65 and older are unretiring and going back to work, for many who are voluntarily signing off on their careers, saying goodbye to rush-hour traffic and long commutes is a highlight of retirement. Not only will you be spending less on gas, you’ll also save money on vehicle maintenance, license and registration costs (or bus and rail fare).

In 2024 (the most recent data), households spent a yearly average of $9,538 on transportation costs, including a vehicle, insurance, and gas, according to the Federal Reserve Bank.

According to a 2025 article by MSN, these costs averaged about $1,098 per month and were the second-biggest drain on budgets.

That figure has risen sharply in the past decade, mainly due to increases in car insurance and rising vehicle prices. Multiply that number by two if you still have two cars in the garage. Thankfully, the long commute and gas prices don’t sting as much as when you were employed.

2. You’ll spend less on clothing

If you’re heading to the office, you’re likely spending what’s needed to look sharp at your job. In retirement, you won’t need too many pressed shirts or high heels, as your wallet gets a break from updating your work wardrobe.

According to the BLS Consumer Expenditure Survey, households with a person age 65 to 74 spend an average of about $1,300 annually on apparel and services, vs slightly more than $2,000 for all age groups.

A word of caution, though: Although household spending on apparel decreases overall in retirement, your loungewear or casual wear clothing costs might rise.

Marguerita Cheng, the chief executive officer at Blue Ocean Global Wealth, says that she sees spikes in spending from recently retired clients who feel the need to update casual wardrobes in the first few years of retirement. Remember, you only need (or can wear) so many golf pants.

3. You’ll spend less on food

Even if you dream of a retirement filled with brunch dates and steak dinners (on the early bird discount, of course), chances are your total food bill will be lower.

That said, from 2020 to 2024, grocery prices in the U.S. shot up by 23.6%. For 2025, they increased by about 2.4%, bringing the overall upsurge to roughly 26.6% over five years. For 2026, projections estimate an increase of about 2.5%, bringing the overall upsurge to roughly 29.7% over six years, according to the USDA.

Everyone has to eat, but with such an increase in food prices, saving on groceries becomes much harder for retirees — especially those on fixed incomes.

According to Erik Hurst and Mark Aguiar, professors from the University of Chicago and Princeton University, the logic that retirees will spend less on food is simply that retirees are more careful, price-conscious shoppers. (Besides, it’s true they’ll likely also eat less).

When you’re not in a hurry at the grocery store, you’re more likely to compare prices on similar products, use coupons and spend more time planning meals for the week ahead. You’re also more likely to buy unnecessary items while walking the aisles, so keep that in mind.

They go on to say that when you’re working, much of your dining out might be quick lunch runs or costly lattes on the way to work when you’re pressed for time or not in control of the agenda. Instead of patronizing fast-food restaurants more frequently, retirees reserve their eating-out dollars for table-service restaurants (and know how to work the discounts).

4. You’ll spend less on entertainment

No 9-to-5 job commitment means lots of time for lots of fun, am I right? Not so fast. There’s a common misconception that you’ll spend more in retirement on entertainment — concerts, movies, clogging competitions, you name it — because you have more time. But the numbers don’t back this up.

On average, retirees spend about $3,000 to $4,000 annually on entertainment, which might include activities such as dining out, hobbies and attending cultural events. That’s according to the most recent data from the Bureau of Labor Statistics (BLS). The same survey showed that people under age 65 spent an average of $4,297 annually on entertainment ($358/month).

This decline likely corresponds with changes in mobility as you age, o r the fact that you want to chill out after years of slogging to the office. Even if you occasionally splurge to see your favorite band, you might find yourself opting to watch Netflix instead of going out every weekend.

But be careful. Streaming services are popping up everywhere, and their layered charges for more and better options can jack up your entertainment bill. We’re looking at you, Paramount+, Discovery+, Disney+ and all your compadres.

5. Your housing costs will be cheaper

According to the most recent analyses (2024) of U.S. Census Bureau data (PDF), 36% of homeowners age 65 and older had a mortgage in 2024–2025, compared with much higher shares for younger groups.

In 2024, the share of owning outright reached about 64%, with mortgage-free homes comprising nearly 40% of all owner-occupied units overall, driven by aging demographics and higher rates among seniors.

Are you in that lucky group?

Housing costs don’t disappear entirely in retirement. Even if you’ve paid off the mortgage, you’ll still spend money on home maintenance, property taxes and utilities.

Downsizing in retirement? Consider moving costs associated with downsizing, relocating or moving into senior-living facilities.

The average annual spending on housing for Americans ages 55 to 64 is $27,019. It decreases to $22,329 for those ages 65 to 74, and it drops further to $21,999 for those 75 and older, according to the Federal Reserve.

6. You’ll spend less on education

Education is no longer confined to traditional school-based education, but has expanded to lifelong learning for all ages. Thankfully, you can still pursue an education for little or no expense.

The average retired household also sees a big decrease in personal spending on education, with an average annual expenditure of just $373. Even if you’re thinking about going back to school in retirement, many colleges and universities in every state offer classes free (or nearly so) to those age 65 (in some cases, 55 to 60) and up.

Note: In calculating spending in retirement, the BLS doesn’t factor in money that retirees contribute toward 529 savings plans for their grandchildren.

7. You’ll spend less on alcohol and tobacco

Many people might suppose it would be the other way around — in retirement, it’s always 5 pm.

However, according to the most recent data from the BLS Consumer Expenditure Survey, 2024, people age 65 and older generally drink and smoke less than younger adults.

In 2024, 65% of those 65-plus reported past-month alcohol use, vs 47% for 18 to 34 year-olds. Cigarette use was about 8% to 10% for those age 65 and older vs 14.9% for people ages 35 to 64.

The average working household spends $352 a year on tobacco and tobacco products, while the average retired household spends $261 a year, about $100 less. Spending on alcohol also decreases in retirement. According to BLS data, the average working family spends $643 a year on alcoholic beverages, while the average retired family spends $469 a year.

People in general, and retirees specifically, are increasingly concerned about their health as health care costs rise, so cutting down on or eliminating unhealthy habits can be lifesaving. A recent Transamerica Retirement Survey (PDF) shows that 75% of retirees are increasingly concerned about health in older age, with many prioritizing being healthy and fit.

8. You’ll spend less on pets and pet supplies

It’s often said that having a pet in retirement can benefit your health in big ways. A four-legged friend can provide companionship for lonely retirees and encourage regular exercise.

However, the promised perks don’t have to translate into massive spending. Working households spend an average of $934 each year on pets and pet supplies, while retired households spend approximately $749 on average.

The BLS says that having children, particularly older children at home, increases household spending on pets. Check out our article on what it really costs to own a dog or cat to learn more.

9. You’ll spend less on taxes

To ease the financial burden on retirees, many states waive or lower property taxes for those older than 65 and exempt a portion of retirement income, particularly from pensions, Social Security and retirement-savings plans, from state income taxes.

These breaks come in different forms: exemptions, tax credits, deferrals, and rate freezes. Check out our articles on the most-overlooked tax breaks for retirees and people over 65, as well as our state-by-state guide to taxes on retirees.

Households in which adults are younger than 65 spend $13,605 annually on personal taxes, compared with $3,466 for retired households. Additionally, households in which adults are 55 to 64 spend an average of $3,072 each year on property taxes.

This number declines to $2,808 for households in which adults are 65 to 75 and $2,408 in households in which adults are 75 and older, per BLS data.