Planning for a Modern Retirement

Increased longevity means your retirement could last 20 to 30 years. Here are four challenges and opportunities this presents for your retirement plans.

Woman building a multifaceted plan for retirement with her team of advisors.

Pause for a moment and imagine your retirement. Where will you be? How will you spend your time? Whom will you spend your time with?

When thinking through your answers to questions like these, you may uncover ambitious plans for your retirement as you imagine all you’ll get to do. Perhaps you want to travel the world, discover new hobbies, learn new skills or even embark on an encore career. And, of course, you’ll want to pursue many of these goals with those you care about most: your family and friends.

Thankfully, there’s a strong chance you’ll have the time do what’s important to you in retirement. That’s because today’s retirement looks quite different than retirement did for those who came before us. Indeed, many retirees can expect the rest of their lives to last 20 to 30 years—that’s a third of your life! With that kind of time, retirement is no longer just the proverbial next chapter; it’s a whole new book.

Now the challenge: building a well thought out, flexible plan that allows you to fully enjoy your retirement. To help ensure you’re prepared, consider these planning opportunities.

Section 01 Broad-view Longevity Risks

Despite what experts have known for some time about longevity, many pre-retirees and retirees today drastically underestimate how long they’ll live. In fact, as a part of a 2023 Northwestern Mutual study on retirement,1 500 affluent pre-retirees and retirees at every stage of the retirement journey underestimated their lifespan by an average of nearly two decades.


was the average self-reported life expectancy

— Northwestern Mutual’s 2023 study on retirement

is how long data and aging experts say you should plan for

— Northwestern Mutual’s 2023 study on retirement

Underestimating your life span is a key risk to your retirement plan. That’s largely because a lot can and will change over the course of a 20- to 30-year retirement. According to renowned retirement and longevity expert Steve Vernon, these changes are called “broad-view longevity risks.”

10 Broad-view Longevity Risks

Broad-view longevity risks are the multitude of challenges you’ll face in retirement thanks to living a longer life. Here are some of the most common ones retirees are likely to encounter over the course of a 20- to 30-year retirement:

  1. Market volatility As the economy cycles, you’ll likely experience stock market downturns that reduce the value of your investments.
  2. Inflation – This is the risk that your buying power will significantly diminish over time.
  3. Taxes – Increased taxes can eat into your net retirement income.
  4. Legacy – It’s important to be deliberate about what you want to leave to your loved ones and/or the causes you care about most. Doing so can free you to spend what you want to in retirement rather than worrying that you’re spending too much.
  5. Health care costs – The cost of care continues to rise quickly, and at the same time, your need for care will increase as you age.
  6. Long-term care – Living longer means you are more likely to require help with daily tasks in your final years. In fact, most Americans turning 65 will need long-term care at some point.2
  7. Diminished decision-making capacity You may grow less vigilant with your finances as you age, making you more susceptible to errors, fraud and/or exploitation.
  8. Relocation As you age, you may find that your home is no longer suitable for your needs, particularly if your mobility is diminished. Similarly, if your community is subject to severe weather patterns, there may come a time when it is no longer feasible to live there, considering your physical condition.
  9. Isolation – As you age, you may feel more isolated, which can be detrimental to your mental and physical health and enjoyment of life.
  10. Family disruption – Changes in your family (e.g., deaths, marriages, babies, relocations, career changes, financial struggles) may affect the availability of this key support system as you age.

The Planning Opportunity: Plan for the Rest of Your Life, No Matter What Happens

While there is no single solution to the multitude of broad-view longevity risks, there is one great place to start: a conversation with your financial advisor. A well-thought-out financial plan will include strategies to help manage financial-related longevity risk factors. What’s more, an experienced and well-networked financial advisor can help you assemble a team of professionals to address risk factors beyond his or her expertise. With the right mix of professionals on your side, you’ll be well positioned to build a comprehensive plan for retirement, no matter how long you may live or the challenges you may face.

Section 02 Purpose, Fulfillment and Happiness

As you approach retirement, it’s only natural to feel optimistic. And you should. After all, you’ll have spent decades working and saving to achieve this major life milestone. Whether you’re thinking about all the fun you’ll have devoting more time to your hobbies and passion projects, traveling to lands far away, or just spending more time with the grandkids, with a third of your life ahead of you, you’ll have a lot of life left to live.

Despite all the excitement you'll feel leading up to retirement, it's important to be aware of the potential for a decline in optimism shortly after retiring. Recent retirees in our study report feeling less optimistic about their hobbies, passions and interests, as well as a general decline in their sense of purpose, when compared to those who are almost retired.

While many of the almost retired individuals we interviewed as part of our study found this data interesting, they were also unconvinced their own optimism would drop to such levels after retiring. If you, too, feel like “it won’t happen to me,” consider that after decades of experience in your profession and/or as a parent, you feel confident in those roles. But, like starting a new career or having your first baby, the day you retire you’ll enter uncharted territory. Now, you’re a newbie retiree with no road map or standard operating procedures to guide how you are supposed to retire. Instead, you’ve got to find your own way while simultaneously facing the tyranny of choice regarding how you’ll spend your time and the reality of a reduced societal role.

“There's no road map. There's no book that says, ‘Here's what you should do in your retirement.’ Not that long ago in our own literature we said people who are retired didn't have a role to play in society, and therefore it felt like being put out to pasture. But over time, there's been a lot more talk about the fact that people are healthier and living well for a longer period.”

Dr. Jacquelyn James, former founding director, Sloan Research Network on Aging & Work at Boston College

— Northwestern Mutual’s 2023 study on retirement

The Planning Opportunity: Go Beyond Just Thinking About Purpose

Because finding your sense of purpose in retirement may not happen by chance, it’s smart to create purpose intentionally and thoughtfully for yourself in retirement. By doing so, you may even increase your overall happiness and sense of fulfillment. In our study, participants repeatedly expressed the importance of thinking beyond the idea that retirement is simply a hard-earned, well-deserved vacation. As one participant put it, you need to think about retirement as your “next act.”

“When you've been going to work for decades and suddenly you don't have to get up, punch the clock and commute to work, it's exciting. You're glad to sleep in and catch up on some of your movies! But after a while you start to get bored because it's the same old routine. If you don't have a plan to stay physically active and sociable and have projects that you want to work on, it can be devastating for retirees.”

- Barbara, study participant, age 60

— Northwestern Mutual’s 2023 study on retirement

Learning From Happy Retirees

While there’s no one-size-fits-all approach to finding your purpose in retirement, in our study we found that the happier retirees we surveyed emphasized the importance of a wide range of factors in retirement, including their daily relationship with their partner; their relationship with family; their passions, hobbies or interests; their friends and social life; and their perceived role or place in society.


of happier retirees emphasized the importance of their daily relationship with their partner

— Northwestern Mutual’s 2023 study on retirement

of happier retirees emphasized the importance of their relationship with family

— Northwestern Mutual’s 2023 study on retirement

of happier retirees emphasized the importance of their passions, hobbies or interests

— Northwestern Mutual’s 2023 study on retirement

of happier retirees emphasized the importance of their friends and social life

— Northwestern Mutual’s 2023 study on retirement

of happier retirees emphasized the importance of their perceived role or place in society

— Northwestern Mutual’s 2023 study on retirement

What’s more, 70 percent or more of the happier retirees in our survey believe each of these areas are important to an ideal retirement. Meanwhile, the less-happy retirees primarily emphasize the importance of their daily relationship with their partner and their relationship with their family over everything else.

The Importance of a Well-rounded Life in Retirement

As you consider the factors that will drive your own sense of purpose in retirement, one message from our study is clear: The retirees pursuing a well-rounded, purposeful life are more likely to feel happy and fulfilled. For the retirees in our survey, there seem to be two key factors driving their sense of purpose: how they’re spending their time and whom they’re spending it with.

How You’ll Spend Your Time

To help take charge and find your own purpose in retirement, a great first step is to consider how you’d like to spend your time. Because the happier retirees in our survey tend to lead well-rounded lives, consider the following aspects of your life and the role each may play in your retirement plans:

  • Working or volunteering Though perhaps counterintuitive, while you may no longer need to work for the money, finding a job, starting a business or volunteering can be a great way to help you contribute to society as a retiree.
  • Learning – You may enjoy taking classes, mastering a new skill, or pursuing or finishing an advanced degree.
  • Health and wellness – If you neglected aspects of your own health and wellness during your career, retirement could present an opportunity to reset by actively pursuing a healthier lifestyle. This includes your mental health, too.
  • Hobbies, passions and interests Many of the retirees in our survey expect to spend leisure time on their hobbies, passions and interests. For survey respondents, these included golfing, boating, hiking, traveling and more.

“I currently work on a cruise line for fun. I also run a battered-women's shelter that I started myself 11 years ago. Other than that, my hobbies are basically anything outdoors, so I keep very busy in retirement.”

- Teresa, study participant, age 66

— Northwestern Mutual’s 2023 study on retirement

Whom You’ll Spend Your Time With

While it is clear from our study data that having strong relationships with your spouse or partner (if applicable) and with your family are important to having a sense of purpose and finding happiness in retirement, other research has shown these relationships are just one piece of the puzzle. Dr. Robert Waldinger, a clinical professor of psychiatry at Harvard Medical School who leads the Harvard Study of Adult Development, says, “The good life is built with good relationships.”

According to findings from the Harvard Study, you can realize happiness from virtually any type of relationship, including those with friends, colleagues, neighbors and even acquaintances. Something as simple as showing kindness to a stranger in the grocery store or talking to a neighbor on your morning walk can be beneficial. In other words, by intentionally investing in your relationships across the board (even those that seem immaterial to your life), you can improve your overall happiness.

As you consider your retirement plans and how you want to spend your time, think critically about whom you’ll interact with along the way. What kinds of opportunities can you create to help deepen your relationships with the people in your life? Retirement can be a time to connect with your spouse or partner in new and different ways; help your adult children with projects around their homes; take on a more active role as grandparent; and reconnect with former colleagues, classmates and friends with whom you have lost contact over the years.

Build Your Purpose Plan

Once you have ideas about how you want to spend your time in retirement and whom you want to spend it with, build a “purpose plan” to hold yourself accountable. Many of the pre-retirees and retirees we interviewed suggested approaching your purpose plan as you would approach a business plan or annual goal-setting cycle in the workplace. In your plan identify how you want to spend your time and who else has a role in those plans (including the advisory partners who can help you achieve your goals). And, like any business planning or annual goal setting you may have done during your career, it’s important to revisit and update your plan (with your spouse or partner, if applicable) on a regular basis. Doing so may just help you live a well-rounded, happier and more fulfilled life in retirement.

Section 03 Retirement Transition

Retirement is one of life’s biggest milestones. It’s on par with starting your career, getting married, buying your first home and having a child. And like these other life milestones, as you transition into retirement you’ll be faced with a series of life-changing decisions.

These decisions will affect many aspects of your life, including your financial security, your overall health and well-being, your access to medical care, where you live, how you spend your time, whom you interact with, and what kind of legacy you leave behind. Many of these decisions will occur between the ages of 60 and 70, but some can begin as early as age 50, and others may come well into your 70s. Many of the decisions you make during the transition will have lasting impacts, so you’ll want to give them the attention they deserve.

The Decisions You’ll Make

The following are some of the key considerations and decisions you’ll make as you transition into retirement. An experienced financial advisor can help you navigate these decisions and/or make introductions to other professionals who can.

Your Financial Security

  • How can you help transition your mindset from saving to spending your savings?
  • If you have earned income, will you make catch-up contributions to your 401(k), 403(b) and/or individual retirement accounts (IRAs)? If so, when will you begin?
  • What do you want your asset allocation to look like as you approach retirement? What about after you retire?
  • What will your investment drawdown strategy look like?
  • When will you start taking penalty-free withdrawals from your employer-sponsored plan or IRA?
  • When will you begin drawing on your Social Security benefits?
  • Should you buy an income annuity? If so, what is the best age to do so?
  • How much guaranteed income will you want each month?

Your Mental and Physical Health and Access to Health Care

  • Will you make your health and well-being a top priority in retirement?
  • How will you support your mental health as a retiree?
  • How can you ensure easy access to your doctors?
  • When will you apply for Medicare?
  • What Medicare supplement plans should you select?
  • Do you want insurance coverage for dental-, vision- and hearing-related expenses?
  • Do you have a plan to pay for long-term care?

Your Community and Home

  • Where, geographically, do you want to retire?
  • Are there weather- and climate-related risks that should be considered in this location?
  • Does the community you want to live in provide easy access to necessary amenities?
  • Is the neighborhood walkable, giving you easy access to exercise?
  • Do you want to be close to family and friends? What about your doctors?
  • What home will you retire in?
  • Will retrofits or renovations be needed to make your home suitable for aging in place?

Your Connections

  • What kinds of ongoing activities (like taking a cooking class that meets once per week or joining a pickleball league) can you participate in to help foster new connections?
  • How can you leverage technology, like social media and video conferencing, to help maintain and foster new connections?
  • What opportunities can you create to foster connections with the strangers and acquaintances you interact with daily?
  • What kinds of professional relationships do you need to establish to carry out your retirement goals (travel agent, accountant, attorney, primary care physician, financial advisor, etc.)?
  • What friends, former colleagues and family members do you want to reconnect with?

Your Time

  • Will you pursue an encore career?
  • What will you do to stay mentally sharp and physically active?
  • What will you do for fun and leisure?
  • Will you volunteer your time and talent?
  • What projects do you want to work on?
  • Whom will you spend your time with?

Your Legacy

  • Do you have an estate plan in place? Does it need to be updated?
  • Are your finances organized in a way that will make it easy for your beneficiaries to find and access your assets?
  • Will you leave your assets to your heirs, charitable causes or a mix of both?
  • How much permanent life insurance coverage will you need to achieve your legacy goals?

While transitioning into retirement you’ll make numerous important decisions like these. To help guide you through this process, consider mapping out the major decisions you’ll need to make and when you’ll want or need to make them.

To help get perspective and make the best decisions possible when the time comes, it can be useful to create a deeper connection to your future self to better understand your needs. To help you do so, consider the following exercises:

  • Write a letter to your future self – Write a letter to your future self, envisioning and describing what you imagine a typical day in retirement will look like. Because your retirement could be 20 to 30 years (or one-third of your life) and have multiple stages, you might even write more than one letter to yourself for the various stages of retirement. Going through this exercise can help you think critically about what’s to come and enable you to better plan for it today.
  • Look at age-progressed photos of yourself – Consider using online artificial intelligence (AI) tools to obtain age-progressed photos of yourself. Research has shown this can be an effective way to help individuals relate more to their future.
  • Observe and talk to retirees – Observe and talk to your friends, neighbors and family members who are already retired. Ask them provocative, thoughtful questions. This can give you additional real-life perspectives on retirement and help uncover potential blind spots in your plan.

As you plan for your retirement transition, an experienced financial advisor can help map out your journey. Many decisions, even those seemingly unrelated to finance, have meaningful financial impact for which your financial advisor can bring valuable information to the discussion. This is another chance to lean on your financial advisor’s network for introductions to additional professionals who should be a part of your retirement planning team.

Section 04 Save Strategically

It can take decades of diligent wealth building to create a financially secure retirement, especially one that is filled with ambitious life goals and may last 20 to 30 years. And while putting money toward retirement is, in and of itself, crucial, it’s also important to have a thoughtful strategy about where to place your dollars.

By thinking strategically beyond your investments and leveraging a range of financial options with your retirement savings, you can maximize the value of your hard-earned money. This can result in a more financially secure retirement that enables you to pursue big life goals and weather the longevity risks you are sure to face.

Think About How You’ll Spend the Money

To be more strategic in building your wealth for retirement, think about how you are actually going to spend the money you are saving. This can enable you to make educated decisions about the financial instruments that make the most sense for your future.

For example, many retirees spend significantly on the following:

  • Housing, food and other essential living expenses
  • Major home repairs and maintenance costs (new roof, new windows, new appliances, etc.)
  • Medical insurance and other health care costs
  • Pursuit of life goals and personal interests, like travel plans, hobbies and entertainment
  • Long-term care needs
  • Charitable giving
  • Leaving a legacy for heirs

The Planning Opportunity: Place Your Dollars Strategically

By getting specific about how you’d like and will need to use assets in retirement (rather than just saving blindly for it), you can better identify the right blend of financial instruments to ensure your hard-earned dollars go as far as possible. Doing so can enable you to live well in retirement, no matter how long that may be.

As you’re putting your money to work, you’ll want to keep these ideas top of mind:

  • Tax diversification – By selecting the right mix of taxable and tax-advantaged financial instruments, you can minimize the impact of taxes, helping your dollars work as hard as possible for you both today and in retirement (as well as for your heirs). Some of these instruments may include qualified plans, like 401(k) and 403(b) accounts, IRAs, Roth IRAs, health savings accounts, permanent life insurance and more.
  • Diversity in financial instruments Financial instruments have pros and cons. As an example, qualified retirement accounts like 401(k)s offer tax advantages but may afford only a limited set of investment options for plan participants and come with penalties for withdrawing funds during certain time periods. What’s more, these accounts traditionally offer market-based investments, but when you get to retirement, it’s a good idea to also have access to assets that aren’t correlated to the swings of the market. That’s where a permanent life insurance policy can help. The cash value of your permanent life insurance can provide you access to a non-correlated asset that you can access at any time. That’s money you could use to help ride out a down market during your retirement. By having a mix of financial tools at your disposal, you create flexibility in your finances, helping increase your financial security in retirement.
  • Asset allocation Selecting the right asset allocation for your risk tolerance, investment time horizon and each life stage helps ensure your assets are appropriately positioned for growth, preservation or somewhere in between.
  • Income protection By protecting your income during your earning years through a mix of disability insurance products, you can keep your retirement saving strategy on track in the event an unexpected change in your health or physical condition prevents you from working.
  • Guaranteed retirement income – Setting up sources of guaranteed income for retirement can help cover your essential living expenses in retirement. What’s more, guaranteed income sources, like Social Security and both qualified and nonqualified income annuities, help mitigate the risk of outliving your assets.
  • A plan for long-term care – Considering both the fact that most Americans turning 65 will need long-term care at some pointii and the rapidly increasing cost of care, you’ll want a multi-pronged plan in place to help pay for these services.
  • Legacy Chances are you’ll want to leave a legacy for your heirs and/or the philanthropic causes you care about most. Having a permanent life insurance policy in force during retirement can supplement your other financial assets, helping you leave the legacy you intend.

According to an independent study conducted by global CPA and business advisory firm EY, having a strategic mix of investments and insurance products can outperform investment-only approaches to saving for retirement.3  Your financial advisor is well positioned to help you set up a financial plan for retirement that does just that, giving you the confidence needed to fulfill your goals in retirement.

Section 05 Start Planning for Your Retirement Today

Having a 20- to 30-year retirement is a game changer for today’s retirees. And this amount of time presents both opportunities and risks: the opportunity to pursue your life’s goals as well as the risks associated with living a longer life. But with a flexible and multifaceted plan for retirement, you’ll be better positioned to pursue your goals and navigate these risks.

An experienced financial advisor who works with other clients like you can help you create a plan for retirement that anticipates common risks and is designed to last as long as you live. He or she can help you think critically about how you’ll spend your time in retirement, shed light on important blind spots in your plans and serve as a conduit to third-party professionals who can bring additional knowledge and resources to the discussion.