When I imagine retirement, I envision myself sitting in a sunroom, reading a magazine, and sipping hot tea. While the image sounds heavenly to me, I would be bored after 2 hours.

When I retire, I know I need more in my life to be fulfilled. Not only will I need the peace of financial stability, I will need to feel productive and useful. It’s just who I am, and I bet it’s who you are, too. It’s a part of being human. Planning how you will spend your money in retirement is important, and I will talk about it in detail in this post. Planning how you will spend your time in retirement is just as crucial.

Before you retire, be sure you’re able to answer the following questions:

1. How much portfolio income will you need to withdraw for your expenses?

Many people think their expenses will decrease during retirement, because they will no longer have work related costs like a professional wardrobe or commuting. Often, the opposite is true. Retirees may fill their time with activities like golf, social clubs, and traveling. They also might experience an increase in medical needs, resulting in unexpected or pricey bills. However, retirees usually have more time to bargain hunt and find creative ways to save money. Overall, your expense changes might be a wash.

As a practical way to prepare for retirement, here is what I want you to do:

  • Calculate how much you spend in a year. Include housing, food, taxes… all of it.

Example: $75,000

  • Find out how much income you will receive annually from social security and/or pensions. If you don’t know what your social security benefit will be, visit socialsecurity.gov.

Example: $25,000

  • Estimate your portfolio balance at retirement.

If you are near retirement, add your annual contributions to your current portfolio balance (don’t worry about the growth rate if it is just a few years away – this will be a conservative factor in the calculation). If retirement is still far off for you, here are my thoughts on how to save.

Example: (Annual Contributions * Years Until Retirement) + Current Balance = Balance at Retirement

($20,000 * 2) + $960,000 = $1,000,000

Most financial professionals believe that a portfolio invested mostly in equities can safely fund a 4-5% withdrawal rate without diminishing the portfolio. Since conservatism in retirement planning is important, let’s go with 4%.

  • Calculate your safe annual portfolio distributions (use 4%).

Example: $1,000,000 * 0.04 = $40,000

  • Add your annual retirement income to your portfolio distributions.

Example: $25,000 + $40,000 = $65,000 of income per year

As you can see, in this example, there is a shortfall in income of $10,000/year.

Knowing this in advance allows you to start to plan. You can increase your retirement contributions, work an extra year, or find ways to cut expenses. It is better to know this in advance than to find out after you retire! Who knows, you might find out that you have excess income and can retire early, travel, or gift to your favorite charities.


2. How will you spend your time after you retire?

Take a moment right now to think about what you want to do after you retire.

Do you want to work part time? Help with the grandkids? Maybe volunteer for a nonprofit? What you do is entirely up to you, but you must do something. You may retire and then discover your plan was not as fulfilling as you hoped. That is ok! Take a few days to come up with new ideas of how you want to invest your time. But that’s it – only a few days. Don’t let a few days of lethargy turn in to a lifetime. It goes back to Newton’s first law. An object at rest will stay at rest. An object (or person) in motion will stay in motion!

I realize this is all theoretical until retirement actually happens, so let’s work on making it feel real. You have 24 hours in a day. Write down how you would like to divide up these hours. Every day may be different, but let’s make a baseline. For example, I will share my own hopes for retirement. You will see a desire for a mix of leisure, relationship building, and productivity.

  • Fitness: 1 hour
  • Leisure (reading, TV, general relaxation): 3 hours
  • Home maintenance/gardening: 2 hours
  • Visiting with friends/family: 2 hours
  • Volunteering/side business: 3 hours
  • Sleep: 8 hours
  • Meals: 2 hours (If I have time to make awesome, healthy food in retirement, why not?!)
  • General Errands: 1 hour

Ok… I am only at 22 hours and I ran out of ideas. It looks like I need some help with how to spend my time in retirement!

If you are like me and are having difficulty figuring out how you will use your time, I encourage you to check out the book, “Half Time: Moving from Success to Significance” by Bob Buford. It might inspire you and give you hope for a fulfilling retirement.

3. Do you have confidence in the stock market to replace your paycheck?

In the first exercise, it may have become clear that you will need to depend on your portfolio to cover your expenses in retirement. Are you prepared for the paychecks to stop? Even for people with millions of dollars in savings, it can be jarring when they no longer receive a paycheck.

Are you confident enough in the stock market and your investment choices to feel at ease in retirement? Mentally prepare yourself for short-term volatility. If the stock market still makes you uneasy, check out my thoughts on why I do not fear the stock market . Talk to your advisor about your concerns and make sure you are invested within your risk tolerance.


Everyone is going to prepare for retirement a little differently, and that is great! But it is important to make a plan. Ben Franklin is often attributed with the saying, “Failing to plan is planning to fail.” Make sure your plan addresses both the financial and personal side of retirement. Your retirement years should be your best years yet!

My retired friends, please email me with what has surprised you during retirement or what you have done to productively use your time. Like I said… I need some ideas!

For more help on getting organized and prepared for retirement, download my financial planning checklist.