2023 Retirement Strategies Still Worth Betting On

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In the modern age, retirement has taken on a whole new meaning. The average retiree in 1935, when the Social Security Act was initiated, could anticipate about five more years of life post-retirement. Fast forward to 2023, and the retirement landscape has vastly evolved. Many retirees today can expect to live up to 25 years beyond their retirement, with some even reaching their 90s. This significant increase in lifespan brings with it the risk of outliving one’s retirement savings, a financial peril that is becoming increasingly prevalent.

According to Kelly Palmer, founder of The Wealthy Parent, a financial planning firm based in Chicago, the primary question retirees should be asking is not how long their savings will last, but how long they themselves will last. While there are numerous unpredictable aspects of life that are beyond our control, Palmer advises retirees to focus on the variables they can influence, such as their lifestyle. She warns that retirement expenses are unlikely to decrease and, in fact, the cost of living is expected to rise. This rise in living costs, coupled with increased spending on travel and leisure activities, can present significant financial challenges for retirees.

The Changing Nature of Retirement: What to Expect and How to Plan

As retirement in the 21st century extends to potentially last up to 25 years or more, retirees are facing new financial challenges. The retirement landscape has shifted significantly from the era of the Social Security Act of 1935, when retirees could expect to live around five more years post-retirement. Today’s retirees can reasonably expect to live well into their 90s, raising concerns about the sustainability of retirement savings.

Don’t Expect Retirement Expenses to Decrease

According to Kelly Palmer, founder of The Wealthy Parent, a financial planning firm in Chicago, the key concern is not how long your retirement savings will last but how long you will last. Contrary to popular belief, Palmer asserts that retirees will not spend less in retirement, and their cost of living will increase. This is largely due to increased spending on travel, leisure activities, and rising healthcare and prescription drug costs associated with aging.

Jennifer Kim, senior partner at Signature Estate & Investment Advisors in Los Angeles, also points out that retirees may forget about the absence of tax deductions enjoyed while working, leading to potentially high taxes during retirement. This, coupled with the potential costs of long-term care, can significantly erode a lifetime of savings if not properly planned for.

Planning and Calculating Retirement Needs

One way to get a grip on an individual’s retirement situation is to use online retirement calculators. These calculators have developed significantly in the past five years, says Melody Evans, wealth management advisor at TIAA in Andover, Massachusetts. They can help retirees to determine roughly how on track they are with their savings.

Kim Gattis, wealth advisor and team leader at UMB Bank in Wichita, Kansas, emphasizes that planning is crucial for a successful transition into retirement. She recommends calculating retirement needs and working towards hitting that number until retirement age. Key factors to consider include current savings, average living expenses, healthcare costs, mortgage or rent, and property or other tax obligations.

Rethinking the 4% Rule

The 4% withdrawal rule, developed by financial planner William Bengen in the early 1990s, has been a common guideline for retirees. However, this rule has come under scrutiny in recent years. While the rule aims to balance a comfortable retirement lifestyle with long-term savings preservation, it is not a one-size-fits-all solution.

Evans suggests that retirees should meet with an advisor yearly to address spending and giving goals compared to investment performance. In addition, Gattis recommends structuring withdrawals to be tax-efficient, which may include a mix of withdrawals from qualified retirement investments and after-tax investment accounts.

Income Flooring: A Potential Solution

Income flooring is a financial strategy that ensures essential expenses are covered by guaranteed sources of income, such as Social Security, pensions, or annuities. This strategy can provide retirees with peace of mind, even in times of market fluctuations or economic uncertainties.

Evans believes that income flooring can create stability for those who feel vulnerable about their retirement finances. Kim adds that income flooring helps separate essential needs from variable expenses, allowing retirees to calculate whether their reliable income sources are sufficient to cover their needs.


In conclusion, as the retirement landscape continues to evolve, it is crucial for retirees to stay proactive, informed, and flexible in their financial planning. This includes being realistic about post-retirement spending habits, making use of online calculators, reevaluating traditional retirement rules, and considering strategies like income flooring. Meeting with a financial advisor can also provide personalized advice tailored to an individual’s unique circumstances and needs.

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