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When retirement — however you define it — is no longer an abstract concept but rather a very real target, you may need a different kind of planning than what you’ve done up to this point in your life. You will need to transition from a savings mindset, focused on accumulating assets, to a spending mindset, focused on turning savings into income that will last throughout your retirement.


Here are a few considerations to help you along the way:

Determine when you want to retire from your current career

A decision on when to retire will depend on how much money you’ve saved, your health and the activities you’d like to pursue, among other factors.


An early retirement may give you more time to enjoy life while you are relatively young and healthy, but it may complicate health insurance decisions because you can’t get Medicare coverage until age 65. Delaying retirement may give you more time to build your savings and offers the potential for higher Social Security benefits that may provide more financial security.

Evaluate how much monthly income you may need throughout retirement

This figure will be driven by several factors, including:

  • Lifestyle: Start with where you want to live and what you want to do there. Spend some time thinking about your average day. Do you plan to travel, socialize, dine out? Or do you envision spending time at home, trying out new recipes, or taking up a new hobby? From there, estimate if your daily living expenses will go down, stay the same, or go up, compared with your current living expenses.

    A retirement spending plan will help you get a handle on how your projected expenses align with your projected income. Remember to factor in health care expenses, which tend to rise as you age. Use our Retirement Budget Worksheet to jump-start the process.

  • Lifespan: You don’t know how long you’ll live but you can make educated estimates based on your current health, family history and lifestyle choices. The Longevity Illustrator, a tool designed by the American Academy of Actuaries and the Society of Actuaries, can help. To lower your risk of running out of money, plan for a long life.

  • Inflation: Rising inflation can erode your spending power over time. If the cost of goods and services outpaces your savings and investment earnings, it forces you to withdraw more from your savings each year. To account for its potential impact, include an annual percentage increase when determining how much income you will need in retirement. Assume at least the historical 3% average inflation hike annually when creating your retirement income plan.

Take inventory of your retirement income sources

Many retirees get their retirement income from one or more sources that fall under two main categories: guaranteed income and variable income. As you near retirement, determine how much you can expect from guaranteed income sources like Social Security, annuities and pensions. Next, look at your variable income sources like 401(k) plans, 403(b) plans, and IRAs, plus taxable vehicles like investments, CDs and other savings accounts. Keep in mind the tax implications of withdrawing assets from tax-deferred accounts when you are building your withdrawal strategy.

Evaluate your comfort level with investment risk

Evaluating your risk tolerance and making any necessary adjustments to your investments is another element of your savings-to-spending transition. The traditional rule of thumb is to gradually lower your overall risk by reducing exposure to stocks and increasing exposure to fixed-income investments, like bonds. This may help to reduce the risk of your portfolio losing value if the markets drop just when you need to start taking withdrawals. Keep in mind that you may also want to maintain some growth potential in your investment mix. That way your accounts could continue to provide returns that keep pace with inflation and income that could support a retirement that lasts 30 years or more.

Work with a financial professional

Financial professionals with experience in retirement planning can provide helpful perspective and guidance during the transition to retirement and beyond. Consider working with one to discuss your unique retirement situation.

Designing a retirement spending plan requires a lot of thought, some assumptions, and an open-minded attitude about your ideal retirement and your ability to pay for that vision.

Your plan will likely change as you get closer to your target date. Periodically run the numbers through our Retirement Income calculator to gauge your progress. If you’re in good financial shape, perhaps you can stay the course. If you’ve fallen behind, you’ll still have time to make some adjustments and get back on track.

OneAmerica Financial is the marketing name for the companies of OneAmerica Financial. Products issued and underwritten by American United Life Insurance Company® (AUL), a OneAmerica Financial company. Administrative and recordkeeping services provided by AUL or OneAmerica Retirement Services LLC, companies of OneAmerica Financial which are not broker/dealers or investment advisors.


Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice. These concepts were derived under current laws and regulations. Changes in the law or regulations may affect the information provided. For answers to specific questions, please consult a qualified attorney, tax advisor, or financial professional.


Investing involves risk, including potential loss of principal.


Before investing, understand that annuities and/or retirement plan products are not insured by the FDIC, NCUA, or any other Federal government agency, and are not deposits or obligations of, guaranteed by, or insured by the institution where offered or any of its affiliates.


Not affiliated with or endorsed by the Social Security Administration, the Centers for Medicare & Medicaid Services, or any governmental agency.