How to Prepare for Retirement or a Work-Optional Lifestyle
- Michael Urch
- Jun 13
- 13 min read
Updated: 3 days ago
How can I prepare for retirement? To prepare for retirement, shift your mindset from saving to creating a strategy for generating reliable income from your investments.
Map out the key stages of retirement and understand how your taxes and income sources will change over time. And, with many Americans now living past 90, planning for 30+ years of retirement is essential to sustain your lifestyle.
Working with a fiduciary financial advisor who proactively guides you through these steps is critical for success. If you have $500,000 or more in investable assets, a team of professionals can help coordinate all aspects of your financial life, aiming to ensure nothing falls through the cracks.
For those just starting with a smaller nest egg, a flat-fee financial planner or robo-advisor can be a great starting point.
As a CERTIFIED FINANCIAL PLANNER,™ Michael advises his clients on insurance planning, investment planning, retirement income planning, tax planning, and estate planning. Michael prides himself on being a professional advisor who puts planning before products.
The Big Question
When someone starts thinking about retirement, they’re usually asking: What do I need to do to be ready?
The question of how to prepare for retirement comes up a lot.
The answer isn’t just about saving money. It’s about knowing what changes when you stop working and start living off your portfolio.
Table of Contents
From Saving to Spending
A lot of the clients I work with have done a great job saving and investing.
They've built strong portfolios, often with retirement accounts they’ve contributed to for years.
That’s what we call the accumulation phase—you’re putting money away, riding out market fluctuations, and you’ve got a paycheck coming in.
But retirement is a whole different ballgame.
When you're no longer earning a paycheck, market volatility feels very different. You're relying on your portfolio to fund your lifestyle, and every dip can feel personal.
That’s why I encourage clients approaching retirement to ask:
What’s my investment strategy now?
Where will my income come from each year?
How will my tax situation change?
These aren’t just technical questions—they shape the entire retirement experience.
Retirement Isn’t One Phase—It’s Several
Retirement doesn’t happen all at once. There are distinct stages, and each stage has its own planning considerations.
Here’s a typical progression:
You retire and delay Social Security for a few years.
At some point, you (and your spouse) begin collecting Social Security, but maybe at different times.
Between the ages of 73 and 75, required minimum distributions (RMDs) kick in from your IRA or 401(k).
Each distinct stage impacts your income, taxes, and overall plan. And with each stage comes opportunity—for tax strategy, Roth conversions, or optimized income planning.
The key is having a roadmap. What worked during your working years won’t necessarily work in retirement. The rules change, and you need a strategy that changes with them.
Note: RMDs begin at age 73 in 2025, but the age will increase to 75 in 2033 under SECURE 2.0.
Age | Milestone | Action Items | Why It Matters |
50 | Catch-up contributions allowed | Maximize retirement savings in a 401(k) or traditional IRA | Boost your retirement savings during high-income years |
59½ | Penalty-free withdrawals begin | Review the withdrawal strategy from retirement accounts | Avoid early withdrawal penalties and plan tax-efficient income |
62 | Earliest age for Social Security | Decide when to start collecting benefits | Collecting early reduces monthly payments permanently |
65 | Medicare eligibility begins | Enroll in hospital insurance and medical insurance | Avoid lifetime late penalties and seek to ensure health coverage |
66–67 | Full retirement age (depends on birth year) | Consider delaying Social Security to increase the payout | You may receive up to 30% more by waiting until full retirement age |
73 | Required Minimum Distributions (RMDs) begin | Start withdrawing from traditional IRAs and 401(k)s | Avoid tax penalties and plan for ordinary income tax on distributions |
75 | New RMD age (starting 2033) | Adjust future withdrawal plans accordingly | Tax laws are changing—plan now to reduce future tax burden |
Decide When and How You Want to Retire
Retirement isn’t just about reaching a certain number.
Retirement is about aligning your finances with your lifestyle goals. Some people want to retire early and travel, while others prefer a phased approach or even start a second career.
The key is to understand your options and make an intentional decision about when and how you want to stop working. It's not just about the finances, but also about what you want personally and emotionally as well.
Your full retirement age also plays a role—it determines when you're eligible for full Social Security benefits, which has a major impact on your overall income strategy.
Know How Much You Need to Retire
There’s no one-size-fits-all number.
To get a true sense of what you need, look at your expected retirement expenses, your anticipated retirement savings, and all your income sources. Factor in inflation, the timing of your Social Security or pension benefits, and how your withdrawals will be taxed—most likely as ordinary income.
If there are years where you’re in a lower tax bracket, that might open opportunities for Roth conversions or other tax planning strategies.
Once you know what retirement costs—and what resources you have—you can build a plan that’s realistic.
Create a Realistic Retirement Budget
Your retirement budget helps your spending support your lifestyle without putting your long-term goals at risk.
That means factoring in both essential costs and the things that make retirement fulfilling: travel, hobbies, family time, and healthcare. Your retirement budget should reflect your values and evolve with your needs.
Build a Retirement Investment Strategy with Your Advisor
When you work with a financial advisor, they should review your portfolio, adjust your risk exposure, and build a strategy that prioritizes income, stability, and tax efficiency.
Whether you’re managing a traditional IRA, 401(k), or other retirement accounts, it’s critical to plan how you’ll draw income in a way that supports your lifestyle and keeps your tax bill manageable. You'll also need to prepare for RMDs at the age of 73, which can impact your taxable income and Social Security planning.
Your advisor should help you with that.
Why an Annual Financial Plan Review Is Essential
I’m a big believer in updating your financial plan at least once a year, especially once you retire.
When you're working, your income is stable and predictable. But in retirement, you decide where your income comes from, and that decision affects your taxes, withdrawals, and overall portfolio.
This is why I recommend:
Reviewing your benefits and tax return every year
Evaluating your portfolio to check that it aligns with your new income needs
Being proactive, not reactive
Most of my clients meet with me at least once a year—many twice—because there’s more at stake and more decisions to make.
How I Help Clients Decide When to Retire
Another big question I hear is: When can I retire? Do I have enough?
At 360, we like to ask a different version of that:
Are you work-optional?
Can you retire if you want to?
To answer that, we look at two things:
Do the numbers work? What does your lifestyle cost, and do your resources support it long-term?
Do you actually want to retire? Because for some, the answer is no.
Some of my clients retire and start a new business. Others take on part-time consulting roles. Retirement doesn’t have to mean “stop working”—it can mean “stop needing to work.” That’s financial independence.
The Top Questions Clients Ask Me About Retirement
Here are a few of the most common concerns I hear in my meetings:
Will I run out of money?
Should I change my portfolio now that I’m retired?
What happens to my plan if the market drops?
How do I pass on wealth to the next generation?
Some clients are incredibly frugal and end up with more than they’ll spend. For them, it becomes about legacy—how to pass assets on wisely and in alignment with their values.
It’s critical that you know how much money you need in order to retire and are sure that you won’t run out. That’s where financial planning comes into play.
Seek out the guidance of a financial advisor or financial planner who can help you go through various scenarios. You’ll want to feel confident that you can maintain your lifestyle and do the things that you love.
Why a Coordinated Approach Matters More in Retirement
Retirement planning isn’t just about your portfolio—it touches every part of your financial life: taxes, estate planning, insurance, and even Medicare.
That’s where working with a coordinated team matters. At 360 Financial, we don’t believe in piecemeal advice. We bring everything together under one roof—or coordinate it closely when it’s not in-house.
Let me give you an example. I have a client who hasn’t updated their estate plan in a decade. We’re bringing them in for a meeting with me, our estate planning attorney, and a life insurance specialist—all in one conversation. That kind of coordination means nothing falls through the cracks.
We also collaborate with CPAs, Medicare specialists, and others to make sure your full financial picture is considered, not just your investments.
How a Coordinated Team Can Help You with Legacy Planning
Let me give you a real-world example of how a coordinated team approach makes a difference.
I have a client who is in a strong financial position. Their retirement plan is well-funded, their investments are performing as expected, and they’ve been diligent savers for decades.
But during a routine review, we realized their estate plan hadn’t been updated in over ten years. Rather than sending them off to find an attorney on their own, we brought the right professionals to the table.
We’ve scheduled a meeting at our office where I’ll be there to guide the process.
One of our estate planning attorneys will join us to revisit and restructure the plan. And our life insurance specialist will participate, assessing whether any adjustments are needed for legacy or liquidity purposes
In a single conversation, we’re planning on addressing the legal, financial, and insurance angles of their estate plan. That level of integration is hard to achieve when you’re working with disconnected professionals. But when we coordinate the process, the client walks away with a clear plan and no lingering list of to-dos.
You Shouldn’t Have to Lead the Process
Here’s something I feel strongly about:
It’s not the client’s job to know what questions to ask. That’s our job.
I recently caught up with a friend at another firm. She said unless a client specifically brings up estate planning or tax strategy, it’s rarely addressed. To me, that’s backwards.
Our role as advisors is to be proactive.
We’re here to lead the conversation, identify the risks, and make sure you don’t miss something critical, just because you didn’t know to ask. That’s what planning is. It’s about making smart decisions in advance, not reacting to surprises down the road.
One of the biggest issues I see when clients come to us from other firms is that they’ve been left to steer the process themselves.
In many cases, the advisor only talks about taxes or estate planning if the client brings it up first. That means the client is expected to know what to ask, when to ask it, and what the consequences might be if they don’t.
That’s a lot of responsibility to place on someone who isn’t a financial professional.
Our approach is different. We believe the responsibility should be on us to anticipate the issues, lead the conversations, and guide you through the questions you may not even know to ask yet. That’s what proactive financial planning looks like.
It’s not about reacting to problems—it’s about helping you avoid them entirely.
Why the “Quarterback” Analogy Matters
You’ve probably heard financial advisors refer to themselves as the quarterback of a client’s financial life.
I understand that the analogy may sound cliché, but I think it’s still useful.
Retirement planning involves more than just investment decisions. It touches taxes, estate planning, healthcare, insurance, and more. No single specialist covers all of it, but someone has to lead the team.
That’s my role. I help assemble and coordinate the right professionals, stay engaged throughout the process, and make sure every piece fits together. I’m not here to run every play—but I am here to make sure we’re running the right ones, in the right order, with the right people involved.
Common Retirement Planning Tips
If you work with a good financial advisor, they'll help you with all of these critical components of retirement planning.
However, I've included this list so you can make sure you're on the right track.
1. Understand Your Pension and Social Security Benefits
Take the time to estimate what you’re entitled to and when it makes the most sense to start claiming.
Whether it's a workplace pension or government benefits, timing your withdrawals wisely can significantly impact your income over the long term. Waiting until your full retirement age—or even beyond—can help you lock in full Social Security benefits.
2. Understand Taxes in Retirement
Retirement doesn’t mean you stop paying taxes—it just changes how you’re taxed.
Income from traditional IRAs, Social Security, or pensions is often taxed as ordinary income, so building a tax-efficient withdrawal strategy is one of the smartest things you can do.
Leveraging tax-free income sources, such as Roth withdrawals or HSAs, can also improve your overall plan.
3. Aim to Pay Down Debt Before You Retire
Carrying high-interest debt or a large mortgage into retirement can eat into your cash flow and peace of mind.
Reducing or eliminating debt ahead of time gives you more flexibility and freedom in how you use your income. It also reduces your reliance on investment withdrawals early in retirement.
4. Plan for Healthcare Costs in Retirement
Healthcare planning goes beyond enrolling in Medicare.
You’ll want to budget for insurance premiums, co-pays, and any private insurance or supplemental plans you may need. Understanding your expected medical and health benefits ahead of time helps reduce stress later.
5. Understand the Basics of Medicare
Medicare is a government health insurance program for people 65 and older.
You should sign up during a seven-month period that starts three months before your 65th birthday. If you miss it and don’t have other coverage (like a job’s health plan), you could pay higher fees forever, like an extra 10% on your monthly bill.
6. Protect Your Retirement With Insurance
Insurance can act as a safety net for your plan.
Whether it’s long-term care coverage, life insurance, or supplemental health insurance, the right policies can help protect your income, your assets, and your loved ones from unexpected events.
Good planning includes making sure you’re covered in the areas most likely to create financial risk.
6. Make the Most of Employer Retirement Plans
Before you leave your job, make sure you’re getting the full value from your retirement benefits.
That includes maximizing your contributions to employer-sponsored accounts like 401(k)s, understanding your pension options, and reviewing any matching opportunities.
These accounts are a key part of building long-term retirement savings, and using them strategically can also reduce your taxable income while you're still working.
If you're retiring early, look into whether you can stay on your spouse’s employer plan temporarily, especially for medical insurance.
7. Consider the Sequence of Returns Risk:
The sequence of returns risk is the risk of your investments losing value early in retirement, which can hurt your savings more than later losses.
If you’re taking money out to live on, a big market drop early means you have less to grow back. For example, if you pull $40,000 a year from a $1 million nest egg, you could run out of money faster if the market falls 20% right after you retire. But the impact is similar whether your savings are $500,000 or $10 million.
To manage risk, you may wish to keep some cash for a year or two of expenses, adjust how much you take out if markets dip, or invest in bonds.
Your advisor should help you minimize this risk and create a financial plan that works for you.
Common Questions about Retirement Planning
What is the $1,000 a month rule for retirement?
The $1,000-a-month rule is a quick way to estimate how much savings you need in retirement. For every $1,000 of monthly income you want in retirement, you should aim to have about $240,000 saved, assuming a 5% withdrawal rate.
Keep in mind that the 5% withdrawal rate depends on factors like portfolio allocation and longevity, with 4% being a safer benchmark. It’s a simple rule of thumb—not a replacement for a personalized plan—but it can help give you a rough target.
What is the rule of three for retirement?
The “rule of three” refers to the three main sources of retirement income:
Government benefits like Social Security or CPP/OAS
Employer pensions or retirement plans
Personal savings and investments
A solid retirement strategy usually includes all three, working together to support your lifestyle and manage risk.
What are the five stages of retirement?
Retirement typically unfolds in five broad phases:
Pre-retirement (Planning) – You’re still working and preparing financially.
Retirement (The Transition) – You leave the workforce and start adjusting to a new routine.
Early Retirement (Active Years) – You may travel, spend more, and enjoy a higher activity level.
Mid Retirement (Stabilizing) – Spending often slows down; health and lifestyle may shift.
Late Retirement (Legacy Phase) – Healthcare needs may increase, and estate planning becomes more important.
Understanding these stages can help you plan more precisely for changing income needs over time.
What is the best first step to prepare for retirement?
The first step is to get clear on your goals and lifestyle expectations—what does retirement actually look like for you?
Then, work with a financial advisor to assess your current financial picture and create a plan that bridges the gap between where you are now and where you want to be.
What are the three C's of retirement?
The three C’s refer to key emotional and practical needs in retirement:
Comfort – Having financial stability and a lifestyle that feels secure
Connection – Maintaining relationships and a sense of community
Contribution – Finding purpose, whether through hobbies, volunteering, or part-time work
A well-rounded retirement plan addresses not just your finances, but also how you’ll stay engaged and fulfilled.
Final Thoughts
Retirement is one of the biggest transitions in a person’s financial life.
It deserves thoughtful, coordinated planning, not just investment management. If you’re thinking about retiring soon—or wondering if you’re financially ready—my advice is simple: Don’t go it alone.
Work with someone who will ask the right questions, create a solid plan, and help you make informed decisions for the next chapter of your life.
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About 360 Financial
360 Financial is an independent wealth management firm with a team of specialized financial advisors and financial planners. As fiduciaries, 360 Financial’s advisors provide services to business owners, entrepreneurs, and professionals. We help investors with sudden wealth, retirement planning, tax planning, estate planning, and business financial planning.
Headquartered in Minnesota, we serve investors across the US with online and in-person wealth management and financial planning services.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Investing involves risk including loss of principal. No strategy assures success or protects against loss.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
This is a hypothetical example and is not representative of any specific situation. Your results will vary.
This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor.
Bonds are subject to credit, market, and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
