Navigating the New Retirement Landscape
Key Takeaways
Longer lifespans require more flexible, tax-savvy, and healthcare-conscious retirement plans.
Working later in life is becoming the norm, sometimes by choice, often by necessity.
Today’s retirees must actively manage income, taxes, and legacy planning, there’s no one-size-fits-all approach.
In generations past, retirement was more straightforward. Most people stopped working at 65, collected a pension, and relied on Social Security to cover a good portion of their needs. But the world has changed and so has the path to retirement. Today’s retirees must plan for longer lifespans, higher costs of living, and greater personal responsibility for managing their own financial futures.
The traditional concept of retirement is being redefined. Let’s explore how, and what that means for those nearing or entering this important phase of life.
Longer Life Expectancy
People are living significantly longer than previous generations. According to the Social Security Administration, a 65-year-old man today can expect to live, on average, to age 84, and a 65-year-old woman to age 87. But that’s just the average, one in three 65-year-olds will live past age 90, and one in seven will live past 95.¹ This longevity introduces several challenges that must be addressed early and thoughtfully:
Delaying Social Security: While benefits can start as early as age 62, delaying until age 70 can increase your monthly benefit by up to 76%. This delay strategy is particularly effective for those in good health and with other income sources to rely on in the early years of retirement.
Healthcare and Long-Term Care Costs: With more years ahead, the likelihood of significant medical needs increases. While Medicare offers a foundational layer of coverage starting at age 65, it doesn’t cover everything. Dental, vision, hearing, and most long-term care costs are excluded. Many retirees find that out-of-pocket costs including premiums, copays, and deductibles can consume a substantial portion of their budgets.
To prepare, some turn to Health Savings Accounts (HSAs) while they are still working. HSAs offer triple tax advantages: contributions are tax-deductible, earnings grow tax-free, and withdrawals are tax-free when used for qualified medical expenses. After age 65, HSA funds can also be used for non-medical expenses without a penalty (though income tax will apply, similar to a traditional IRA). For those with access to an HSA and a high-deductible health plan, this can be a powerful tool to fund future healthcare needs in retirement.
Planning for long-term care, whether through insurance, savings, or hybrid strategies is also essential. The costs of assisted living, home healthcare, or nursing facilities can run into hundreds of thousands of dollars over time.Adjusting Investment Risk for Longevity: A longer retirement horizon can justify maintaining some exposure to equities to help outpace inflation. However, retirees must also protect against sequence of returns risk — the danger of experiencing poor investment returns early in retirement while making withdrawals. Solutions like a bucket strategy, dynamic withdrawal systems, or annuities with income guarantees can help retirees balance growth with stability.
In short, retirement planning must go beyond "having enough to stop working." It must include preparing for rising healthcare costs, optimizing government benefits, and designing a portfolio that can endure a 30+ year time horizon.
Evolving Employment Patterns
The classic notion of retiring at 65 is evolving, not just by choice, but increasingly by necessity. With inflation and healthcare costs outpacing wage growth in many areas, more Americans are working later in life, even after they’ve technically “retired.”
Some retirees take on part-time jobs or consulting roles to supplement income. Others engage in entrepreneurial work, turning hobbies into side businesses. For many, it’s not just about financial need; it’s also about maintaining structure, social connection, or purpose.
Still, the financial incentive is real: delaying withdrawals from retirement accounts, continuing to contribute to savings plans, and deferring Social Security can all significantly boost long-term retirement security.
Policy changes have helped support this shift. The SECURE Act 2.0 raised the age for required minimum distributions (RMDs) to 73 (and eventually 75), and increased contribution limits for older workers. These adjustments recognize that today’s retirees are more active, more capable, and, in many cases, more financially motivated to keep working than ever before.
Planning for retirement now requires flexibility. Rather than viewing retirement as a single event, many Americans are transitioning in phases with work continuing to play a part in the early years.
Shift from Pensions to Defined Contribution Plans
In the past, many workers could count on a defined benefit pension to provide guaranteed income in retirement. Today, those plans are largely extinct outside of government or union jobs. Instead, most Americans rely on 401(k)s, IRAs, and other defined contribution plans.
This shift has placed the responsibility for retirement squarely on individuals. You must decide how much to save, how to invest, and, most importantly, how to turn those assets into sustainable income that lasts for decades.
The challenge doesn’t stop at accumulation. Retirement income planning involves coordinating withdrawals across multiple account types (taxable, tax-deferred, and Roth), minimizing taxes, and managing investment risk. There’s also the psychological shift: going from saving for the future to drawing down your assets requires thoughtful strategy and a strong sense of financial discipline.
A sustainable retirement plan today isn’t just a spreadsheet of projections, it’s a flexible, evolving roadmap that adapts to changes in your life, your goals, and the economy.
Actively Managing Taxes
Retirees often underestimate the impact of taxes. But the way you withdraw money from your retirement accounts, and the order in which you do it, can dramatically affect your lifetime tax bill.
Taxable Social Security benefits, required minimum distributions, capital gains from brokerage accounts, and surcharges on Medicare premiums can all add up. Thoughtful tax planning can reduce these burdens and help stretch your retirement savings.
Some common strategies include:
Roth conversions during lower-income years before RMDs begin
Qualified charitable distributions (QCDs) to offset RMDs and reduce taxable income
Tax-efficient withdrawal sequencing, balancing withdrawals from taxable, tax-deferred, and tax-free accounts
Gifting strategies or using donor-advised funds to manage charitable giving efficiently
Tax-smart planning doesn’t end when your paycheck does. In fact, it becomes even more essential.
Increasing Focus on Legacy and Generational Planning
As retirees look beyond their own needs, many begin to think about what they’ll leave behind to children, grandchildren, or charitable causes. With rising real estate values, larger retirement accounts, and concentrated assets, estate planning is not just for the ultra-wealthy.
Whether your goals include passing on wealth efficiently, supporting heirs during your lifetime, or creating a philanthropic legacy, thoughtful planning can reduce estate taxes, avoid family conflict, and ensure your intentions are fulfilled.
Tools like updated wills, trusts, beneficiary designations, and gifting strategies should all be reviewed regularly and coordinated with your broader financial plan.
Final Thoughts
Retirement is no longer a static goalpost. It’s a multi-decade journey that must adapt to a world of uncertainty, from inflation and market cycles to rising healthcare costs and changing tax laws. While this complexity can be overwhelming, it also creates opportunities for those who plan carefully and think long term.
At Rimac Capital, we help individuals and families build financial plans that evolve with life. We don’t just create projections, we help you make more confident decisions at every stage of retirement.
Whether you're nearing retirement or already there, we invite you to schedule a conversation and explore how strategic, personalized planning can help you thrive in this new era. To get started, schedule a Free Strategy Session with our team today.
References:
Social Security Administration. “Retirement Benefits.” https://www.ssa.gov/benefits/retirement/planner/ageincrease.html
Fidelity. “How to Plan for Healthcare Costs in Retirement.” https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs
IRS. “Health Savings Accounts (HSAs).” https://www.irs.gov/publications/p969
This content is for informational purposes only and should not be considered financial or investment advice. Please consult with a qualified financial professional regarding your unique situation. Past performance does not guarantee future results. Investments involve risk, including the potential loss of principal. This is not a solicitation to buy or sell securities.
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