A Practical Guide for Pre-Retirees in Their 50s and 60s

At some point in your 50s or 60s, a very real question begins to take shape: "Can I actually afford the life I've been imagining?" Maybe you picture Sunday mornings on the golf course, summers at the lake house, helping your grandchildren with college, or simply waking up without an alarm. These aren't luxuries — for many Americans, they're the milestones a lifetime of hard work was meant to fund.

But turning those dreams into a concrete financial plan requires more than optimism. It requires honest math, smart strategy, and an understanding of how your money will work for you when you stop working for it.

This guide walks you through the key questions every pre-retiree should be asking — and how to begin finding answers.

Step 1: Define Your Retirement Lifestyle

Before you can calculate whether you can afford something, you need to define what "something" actually looks like. Retirement lifestyle planning begins with a clear picture of how you want to spend your time — and your money.

Think in Categories, Not Just Dollars

Most financial planners break retirement spending into four broad buckets:

• Essential Needs — housing, food, transportation, healthcare, utilities
• Lifestyle Wants — travel, dining out, hobbies, entertainment
• Legacy Goals — gifting to children or grandchildren, charitable giving, estate plans
• Contingencies — unexpected medical costs, home repairs, family emergencies

Consider a real-world example: Maria and David, both 62, have spent the last 30 years raising three kids and building careers. They own their home outright and dream of taking two international trips a year, visiting grandchildren frequently, and eventually downsizing to a smaller community. Their vision is clear — now they need to put a price tag on it.

The Retirement Lifestyle Spectrum

To help visualize what different retirement lifestyles actually cost, consider these three general profiles:

* Savings estimate based on a 25-year retirement using the 4% withdrawal guideline. Actual amounts will vary based on Social Security income, pensions, investment returns, inflation, and other personal factors. This is for illustrative purposes only and does not constitute financial advice.

Step 2: Understand Your Income Sources

Once you know what your retirement lifestyle costs, the next step is understanding where the money will come from. Most retirees draw income from a combination of sources — and the mix matters.

Social Security

Social Security is a foundational income source for most Americans, but when you claim it makes a significant difference. Claiming at 62 locks in a permanently reduced benefit. Waiting until your full retirement age (typically 66–67 for those born after 1954), or even until 70, can increase your monthly benefit substantially.

Example: If your full retirement age benefit is $2,200/month, claiming at 62 might reduce that to around $1,540/month — a $660/month difference that compounds over a 20- or 30-year retirement.

Retirement Accounts (401(k), IRA, Roth IRA)

The money you've saved in tax-advantaged accounts will likely form the core of your retirement income. Understanding how each account type is taxed — and in what order you should draw them down — can meaningfully extend how long your money lasts.

• Traditional 401(k) / IRA: Pre-tax contributions, taxable at withdrawal
• Roth IRA / Roth 401(k): After-tax contributions, tax-free qualified withdrawals
• Required Minimum Distributions (RMDs): Must begin at age 73 for traditional accounts

Pensions & Annuities

If you're fortunate enough to have a pension, it provides guaranteed income — a financial anchor in retirement. Annuities can serve a similar role, converting a lump sum of savings into a predictable monthly income stream. For those who worry about outliving their savings, guaranteed income products deserve serious consideration.

Part-Time Work or Consulting

Many people in their 60s find meaningful, flexible work that supplements retirement income while keeping them engaged. Even $12,000–$20,000 per year from part-time work can significantly reduce the pressure on your investment portfolio during early retirement.

Step 3: Account for the Wildcards

Even the best-laid retirement plan can be disrupted by factors outside your control. Understanding the major risks — and building some protection against them — is essential to lasting financial confidence.

Healthcare Costs

Healthcare is often the most underestimated expense in retirement. Even with Medicare beginning at 65, retirees face premiums, copays, deductibles, and potential long-term care costs that can run into the hundreds of thousands of dollars over a lifetime.

Average estimate: Fidelity's 2023 Retiree Health Care Cost Estimate suggests a 65-year-old couple may need approximately $300,000 in savings dedicated to healthcare alone — not including long-term care.

Inflation

At a modest 3% annual inflation rate, your purchasing power roughly halves every 24 years. A $6,000/month retirement income that feels comfortable at 65 may feel tight by 80 if it's not growing. Investments with inflation-fighting potential — including diversified stock exposure and inflation-adjusted income sources — help protect against this silent erosion.

Sequence of Returns Risk

If the market drops sharply in the first few years of your retirement and you're simultaneously withdrawing funds, you may permanently deplete your portfolio faster than projected. This is called sequence of returns risk, and it's why the first decade of retirement is often more financially sensitive than people realize.

Longevity

According to Social Security Administration data, a 65-year-old woman has roughly a 50% chance of living past age 88. A couple has an even higher probability that at least one partner will live into their 90s. Planning for a 30-year retirement rather than 20 is a meaningful — and increasingly necessary — shift in thinking.

Step 4: Run the Numbers — Your Personal Retirement Check-Up

Knowing the concepts is only half the battle. The real clarity comes from sitting down with your actual numbers. Here is a simplified framework to get you started:

The Retirement Readiness Formula

This formula is a starting point, not a final answer. Tax strategy, investment allocation, Social Security timing, and personal health are among the many variables a qualified financial advisor will help you weave together into a comprehensive plan.

Step 5: Lifestyle Adjustments That Make a Big Difference

If your numbers reveal a gap between the lifestyle you want and what you can currently fund, you're not alone — and you still have options. Here are practical levers that can meaningfully improve your retirement picture:

Work Two or Three More Years

Each additional year of work does triple duty: you add to your savings, delay portfolio withdrawals, and potentially increase your Social Security benefit. Even delaying retirement from 62 to 65 can significantly improve long-term sustainability.

Right-Size Your Housing

For many Americans approaching retirement, their home is their largest asset. Downsizing — moving to a smaller home or lower cost-of-living area — can free up substantial equity and reduce ongoing costs simultaneously.

Adopt a Flexible Withdrawal Strategy

Rather than withdrawing a fixed amount annually, some retirees find success with a flexible approach: spending a bit less during market downturns and a bit more during strong years. This dynamic strategy can extend portfolio longevity meaningfully.

Prioritize Guaranteed Income

Having a baseline of guaranteed income — Social Security, a pension, or an income annuity — reduces the pressure on your investment portfolio and provides peace of mind regardless of market conditions.

Your Lifestyle Is Possible — With a Plan

The retirement you've worked for is within reach. But it requires intentional planning, realistic numbers, and the courage to look at your situation honestly — while there's still time to make adjustments.

Whether your ideal retirement means exploring the world, spending time with family, pursuing a passion project, or simply finding peace and security in your daily routine, the financial strategies exist to help you get there.

The best time to start optimizing your plan was ten years ago. The second-best time is now.

IMPORTANT DISCLOSURES

This article is provided by Eternity Financial Alliance for educational and informational purposes only. It does not constitute investment advice, financial planning recommendations, or an offer to buy or sell any security or financial product. The information presented is general in nature and may not apply to your individual circumstances.

All examples, scenarios, and figures used in this article are hypothetical and illustrative only. They are not intended to represent actual investment results or predict future performance. Past performance is not indicative of future results. All investing involves risk, including the potential loss of principal.

Eternity Financial Alliance is a registered investment adviser. Registration does not imply a certain level of skill or training. The "4% Rule" referenced herein is a general planning heuristic and does not constitute a guarantee of investment outcomes. Readers are encouraged to consult a qualified financial professional before making any financial decisions.

Healthcare cost statistics referenced are based on publicly available third-party research for illustrative purposes. Actual costs will vary. Social Security benefit examples are approximations and do not constitute a guaranteed projection. Please visit ssa.gov for personalized estimates.

This material has been prepared in compliance with the SEC Marketing Rule (Rule 206(4)-1 under the Investment Advisers Act of 1940). No testimonials, endorsements, or performance data are implied herein. Educational content only.