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Demystify Retirement

Trading a reliable 9-to-5 life for the uncertainties of retirement may seem daunting, but if you prepare well, you can thrive

By Christine D. Moriarty

Retirement is a dream for many; turning it into a reality can feel daunting. Paying attention to all the rules and the investments needed for a secure retirement can feel overwhelming. Add the complexities of Medicare, pension plans and the cost of living, and some people never even start to plan ahead.

A woman sitting at the table taking a look at her income sources and preparing for retirement. Next Avenue
Even if you think, "I can never retire," find all your future sources of income. It is never too early to know where they are, how big they are and how to access them.  |  Credit: Getty

However, with a bit of planning long before work life is over, your small steps can pay off. Rather than waiting to get ready for retirement when "it is closer," start today.

Early in retirement, retirees tend to spend more on travel, hobbies and new residences.

Commit to building a retirement in your future by taking these three steps:

1. Maximize Your Retirement Account Contribution

For 2024, the Secure Act 2.0 raised limits on contributions to retirement plans. Whether you have a 401(k), 403(b), Thrift Saving Plan or any type of IRA, you can contribute more dollars than was permitted in 2023; however, you must make the change, it does not happen automatically. The limit on 401(k) plans increases to $23,000 for 2024, and the IRA contribution cap climbs to $7,000.

Over 50? You may increase your annual contribution by $1,000 to $8,000.

If you feel you cannot contribute the maximum amount in 2024, try raising your contribution by as little as 1% of your paycheck. In addition to feeding your retirement fund, that move can lower your income taxes this year.

2. Know Your Spending Today

An old adage of financial professionals is that most people spend 60% to 70% of their annual pre-retirement spending after they retire. This is an unreliably broad generalization because retirement spending depends on the individual and varies widely.

Early in retirement, retirees tend to spend more on travel, hobbies and new residences. As they hit their stride in retirement, spending typically levels off.

Over the years or decades (for the lucky ones), there are pockets or bumps in the road that are unpredictable but result in spending increases. Some may be a temporary hitch like a big move. Others are for ongoing medical bills.

Rather than writing up a budget to map your spending in retirement which may be five, ten or more years away, understand what you spend today. You cannot know what the future will bring and planning for the unpredictable is impractical beyond having a safety account. You can, however, learn from what you spend annually now to estimate what your spending will be like as you enjoy retirement.

Know Where You Stand

What you spend now is a good indicator of what you will need in retirement, so use your number from 2023 as a starting point. Put aside a couple of hours to review how much you spent last year. A good time to approach this step is when you gather tax information, have access to annual spending reports from credit cards and can easily review bank statements for medical and charitable donations. With this information at your fingertips, plus your W-2, you have an overview of your income and spending.

Even if you think, "I can never retire," find all your future sources of income.

From today's spending, deduct the money you have been saving annually in your retirement plan plus large one-time expenses like college tuition. This will be a reasonable estimation of your spending.

As one couple discovered, once they deducted retirement savings of $42,000 ($21,000 each) from their annual expenses, their spending was much lower than they expected. Best of all, retirement was much closer than they thought!

There is power in numbers.

3. Review Future Income from Social Security and Pensions

Even if you think, "I can never retire," find all your future sources of income. It is never too early to know where they are, how big they are and how to access them.

Think of all the places you worked and states you lived in and ask if they know of a long-forgotten pension or overlooked bank account in your name. These so-called missing assets, in addition to Social Security, may help you. Organize them now and begin to do your research on what you have and what you will have for income in retirement.

A Pleasant Surprise

A coworker who had once worked in a different state almost didn't bother to ask how much she might receive from a pension. "It would not be much," she said. "I did not even work there 10 years."

With encouragement, she did the paperwork to verify who she was and what and when she might be entitled to a pension. Turns out she was entitled right away at age 60 and started receiving a monthly check for $500. This gave her extra money to save for retirement while she was still working, and would put a dent in her monthly grocery bill when she was fully retired.


Social Security benefits are valuable because they are regularly adjusted for inflation and designed so that recipients cannot outlive their benefits. Social Security statements are easy to access on-line. Create an online account and then print the information. Look at the following:

  • Confirm your work history to be sure it is correct. That is what your monthly Social Security is created from.
  • Verify the details. If your name, date of birth or other details do not line up, you will want to correct them now. When it comes time to collect, you do not want any delays because the check cannot be deposited directly to your account, because you forgot to inform Social Security about reverting back to your birth surname, for example.

There is nothing like having all the facts and knowing what you are entitled to make life better.

4. Consider Your Lifestyle Priorities in Retirement

Don't get lost in others' dreams and plans for retirement. Everyone is different. Even the best of friends have different goals in retirement. You may love your house and decide to stay there in retirement. Your best friend may be starting to look at condominiums in Florida for retirement. Knowing your priorities ahead of time prevent you from getting caught up in someone else's dream and investing in hobbies or property in which you really have no interest.

As you ponder your years ahead, start now to create a life you want to live. Do you want to spend more time with your grandchildren? Buy an RV? Travel overseas? Start quilting? Begin now so you have the sense if it is fulfilling and in the direction you want to go in retirement. I call this "practicing retirement."

Practice Being Retired

"Practicing retirement" can be one of the best things you can do in your pre-retirement years. This prevents future missteps and creates fun for you now!

Many people get discouraged about retirement because they do not consider the details. They think it is too far away and not a reasonable goal. With these steps, you can approach retirement looking beyond the big concept.

Planning ahead is where the power lies.

Christine D. Moriarty
Christine D. Moriarty 

C.D. Moriarty, CFP, is a Vermont-based financial speaker, writer and coach. She can be found at
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