Women's Money Wisdom

Episode of 267: Rethinking Retirement: Spending Surprises, Confidence Gaps & Evolving Timelines

• Melissa Joy, CFP® • Season 4 • Episode 267

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Is your retirement plan based on outdated assumptions—or real-world trends?

In this episode of Women’s Money Wisdom, Melissa Joy, CFP®, breaks down how retirement is changing—especially for women and Gen Xers. 

From unexpected post-retirement spending spikes to the growing trend of phased retirement, Melissa shares insights on what today’s retirees really need to be thinking about.

You’ll hear why traditional assumptions about retirement may no longer apply, how inflation and rising costs are impacting timelines, and why confidence levels vary so dramatically between generations and genders.

Whether you're planning decades ahead or approaching retirement soon, this conversation will help you understand the trends, risks, and planning opportunities shaping the future of retirement.


Key Topics Covered:

  • Why retirement spending often increases—not decreases—right after leaving the workforce
  • The impact of inflation and rising living costs on retirement timelines
  • Confidence disparities across age groups and between men and women
  • Commonly underestimated costs in retirement—especially healthcare
  • How phased retirement is changing the traditional retirement model
  • The importance of flexible, forward-looking planning strategies


Tune in to gain valuable insights on how to build a retirement strategy that’s both realistic and resilient—regardless of where you are in your journey.

The previous presentation by PEARL PLANNING was intended for general information purposes only. No portion of the presentation serves as the receipt of, or as a substitute for, personalized investment advice from PEARL PLANNING or any other investment professional of your choosing. Different types of investments involve varying degrees of risk, and it should not be assumed that future performance of any specific investment or investment strategy, or any non-investment related or planning services, discussion or content, will be profitable, be suitable for your portfolio or individual situation, or prove successful. Neither PEARL PLANNING’s investment adviser registration status, nor any amount of prior experience or success, should be construed that a certain level of results or satisfaction will be achieved if PEARL PLANNING is engaged, or continues to be engaged, to provide investment advisory services. PEARL PLANNING is neither a law firm nor accounting firm, and no portion of its services should be construed as legal or accounting advice. No portion of the video content should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if PEARL PLANNING is engaged, or continues to be engaged, to provide investment advisory services. A copy of PEARL PLANNING’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https:...

Speaker 1:

Welcome to the Women's Money Wisdom Podcast. I'm Melissa Joy, a certified financial planner and the founder of Pearl Planning. My goal is to help you streamline and organize your finances, navigate big money decisions with confidence and be strategic in order to grow your wealth. As a woman, you work hard for your money and I'm here to help you make the most of it. Now let's get into the show. And I'm here to help you make the most of it. Now let's get into the show. Just a quick note before we dive in. The information that we share is meant to educate and inspire, not serve as personalized financial advice. Everyone's situation is unique, so be sure to consult with your own financial professional for guidance that fits your life. And just so you know, the opinions shared in this podcast are my own. So be sure to consult with your own financial professional for guidance that fits your life. And just so you know, the opinions shared in this podcast are my own and those of my guest, and they don't necessarily represent those of any organizations that I'm affiliated with. For more important disclosures, please go to our webpage at PearlPlancom. Now let's get started.

Speaker 1:

Hi everybody, welcome back to the Women's Money Wisdom Podcast. I think we have a refreshing and interesting episode today. I know that, for you as listeners, our episodes that talk about retirement are always quite popular, and so I did some research on some new information and trends in retirement research, and I thought it would be fun to talk about some of the trends that more recent studies are seeing in terms of retirees. Now I know our listener population is in many cases, a little bit younger than retirement. We think that the people that listen to us and you guys can let us know are often millennial and Gen X listeners, and so we think I think that some of the information I'm going to share today is really relevant to you and your lives, and it also may be relevant to your peers and parents and friends who are in that retirement phase right now. So, without further ado, I'm going to provide you seven or eight trends that we're seeing in terms of retirement, and I just want to comment on kind of what I see anecdotally when working with clients and seeing these trends. So one of the first really interesting things in a study that was published by JPMorgan Chase is that people have a spending surge right when they retire, and so there has been this concept, and maybe in the past.

Speaker 1:

I think I've talked with you about the retirement spending smile, where people have the go-go years early in retirement and then the slower go years as they kind of stay closer to home, hopefully in good health, in their 70s and 80s or 80s and 90s, and then no-go years where healthcare costs go back up as you get to kind of end-of-life care or with longevity. And so, though, what studies show, is that often right. When people retire, you know, maybe there's that bucket list or kind of the list of things to do, but there's been a common conventional wisdom that people really adjust pretty quickly to their new fixed income. But research is showing that people have a spending surge immediately after their retirement. This is particularly happening with people who have lower income under $150,000 of income when they were working, and so this just contradicts common beliefs about what happens with retirement, in that people adjust right away. So this goes hand in hand with that retirement spending smile, but I think it is an added factor, and what I've seen when working with people is that there are groups of people that just really lock down and need to be encouraged to be able to spend, but there are also big swaths of people who just don't have their sea legs yet, or people who know. Hey, I'm willing to compromise a little bit down the road because there's things I want to do now while I know I have my health. All of those can be okay. I just encourage people to use resources to know what you're doing. You know if it's a fit and a possibility and certainly I'm biased. But financial planners' approaches to understanding what and how to spend in retirement can be incredibly valuable so that that retirement spending surge doesn't come into a retirement spending strategy where you really have to make cuts later in life.

Speaker 1:

A second interesting piece of information that we took from a publication on kind of trends in retirement from Harbor Life and retirement statistics is that 40% of older Americans, after we had this bigger wave of inflation, were delaying retirement due to inflation or rising living costs. And I think you know we had a time period where both inflation was very low for a very long time and then we also had a time period where interest rates coincidentally, probably related to that inflation were also quite low, which made it easier to kind of live life in a way that didn't have higher costs. And I think that's some of the things that we've been dealing with over the last few years. It's just like once inflation comes, the prices don't go back to where they used to be, and that's a lot to get used to.

Speaker 1:

And I will tell you that any time you have circumstances where there's difficult headwinds in markets or the economy whether it's inflation, a bear market, a recession all three gosh? I hope not then people tend to make different choices. They may extend their work or they may not have the opportunity to extend work, because if there were a big recession, unemployment might skyrocket. But I have seen in the past having worked and lived through the kind of tech wreck of 2000 to 2002, as well as the great recession and great financial crisis of 2008 and 2009, and everything since that, people are adaptive and you will find that people make adjustments based on the way the world is going, whether that's working longer, spending less, etc. Now you just need to make sure that you're not pricing everything to perfection. So, whether it's financial planning or retirement planning, doing the work to make sure that you have safeguards, that you have planned for a rainy day, that you know that not every year will be up when it comes to markets and that there will be some unexpected expenses when it comes to retirement. Those are important things that can help you be successful, no matter what.

Speaker 1:

A couple of the next kind of interesting things piece of data that I picked up, which is coming from a report from News Market is that there is a increase in unexpected health care costs and people miscalculate those health care needs when it comes to retirement, the first thing I would mention is when, in all of our retirement planning software, we make assumptions that inflation is going to be higher when it comes to health care and I don't think anybody would disagree. You know whether it's the passed on costs that you have if you have pre-retirement or pre-Medicare insurance, if you retired before age 65, or you know just the incidental costs that are not covered. Healthcare is just darn expensive and you have more and more often doctor's appointments, more and more chronic conditions. So this is something to keep in mind. Healthcare expenses can be a major concern for retirees, and I know there's two batches. Both Things tend to go down when you select Medicare.

Speaker 1:

But if you had, you know, just kind of chosen Medicare Advantage versus additional, you know kind of more traditional Medicare coverage with Medigap plans, you may be fine with that kind of HMO-like environment when you're healthy and young for a retiree in your 60s, but it may be disappointing or difficult when you need more extensive or specialized care later in life. But then there's also a cohort that is very concerned about the state of the Affordable Care Act, which is those of you who plan to retire before age 65. Because health insurance, if you retire before 65, if you can't go on to a spouse's plan that is covered by employer, can be very expensive, and so just you know that's not a reason not to retire early, but you need the right numbers, you need the right information, one of the things I would suggest, whether you're Medicare age in that case, or approaching Medicare age, talking to a Medicare consultant who is informative and not salesy can be really valuable. You don't pay more for Medicare when you work with someone who's experienced versus when you go into the marketplace or buy it at your drugstore. Also, though, there are specialists who do individual health insurance plans who can navigate through the ACA marketplace advantage for understanding what the cost might be if you're going to either have a gap in employment or you're going to be retiring earlier than Medicare age, which, again, many of my clients are doing, and doing successfully with confidence and loving it. But it does take planning. You need to decide where the money's coming from and how much money you're going to need and understand how all the parts work.

Speaker 1:

There are also one of the trends that we saw with research coming from again from, in this case from a BlackRock retirement survey was that there are confidence gaps when it comes to retirement planning by generation, and the least confident generation is my generation, generation X. They're the least optimistic generation about when it comes to retirement. Only 53% of us feel confident when they feel like they can retire on their own terms. That's disappointing to me because you know these are my peers, these are my people, but I would tell you, if you're in that group that just doesn't know how retirement will ever work, our ages are not too late. If you're in your 40s and 50s to really get serious about retirement, do some catching up, do some retirement adulting and get you know kind of your retirement game plan on. There are also gender disparities when it comes to these cohorts and 59% of women feel on track for retirement in general versus 75% of men. That's a disappointment and I hope for those of you who are listeners to our podcast, that our money talks are helping you to feel more confident, whether it comes to retirement or other aspects of your money life.

Speaker 1:

If you have those confidence gaps, you're not alone. I hear about them all the time and one of the things I would suggest is, you know, kind of locking in with setting aside space for just money decisions and, if you have the resources to engage with a financial professional in whatever way that can be really powerful to figuring out how things work. Okay, another interesting statistic that I found was that so many people have during their retirement this is information from McKnight Senior Living so many people end up having unexpected financial shocks when it comes to retirement. And I find sometimes that I have clients who are like we're going to pay off the mortgage, we're going to do all the home improvements we need, we're going to buy a car, I'm just going to be ready for retirement because I'm never going to have a big expense again and whether it's a planned expense or a surprise, you can have things that go bump in the night and you also will be changing. You know, improving, investing, buying another car. You didn't make your last big financial purchase or have your last financial, you know surprise on the downside the day that you retired. And so if you haven't built in a safety net or cushion whether it's cash on hand, every single expense isn't a known expense when you retire then these shocks can be really harmful to kind of your overall financial plan and make things more shaky, whether it's a medical expense or unexpected inflation or another. You know kind of big bad wolf is if you have a really bad stock market right when you retire. Now, all of these things are manageable. I just think again, it helps to be much more realistic in terms of who you're working with, so that you're not just blindly kind of throwing numbers in a retirement calculator and saying, oh, I'm going to withdraw 4% of my portfolio and that's great. It is a little more complicated than that to understand exactly how things work and you know, with my clients I'm always trying to build in that unpredictability in the way that we do planning.

Speaker 1:

A curious and, I think, very like encouraging trend is that we see more and more people who are phasing their retirement and have longer working lives. Now why is this a good thing? Well, I do think that retirement, when you're planning it and it can be transitional or phased in can feel more comfortable for you, and it also may allow you to kind of start and plan to retire a little bit earlier. So working part time, continuing to do some consulting income with your previous job, all of those types of things can be quite powerful. Phased in retirement is, while becoming more common, it also requires a lot of planning because you need to know oh, what would I do about health insurance, or what would I? How will I kind of make up for gaps in income? So it's not without its own retirement planning needs.

Speaker 1:

Another interesting thing is that, by generation, people are often feeling, you know, like as a group, certain things, and so a couple of generations that I'll pull out is our millennials feel like they have to balance so much with balancing debt payments and long term savings, while Gen Z is already worried about outliving their savings, even though they're barely getting started Now. These are kind of. You know, millennials were often said to be the broke generation and yet you know they were just doing a little bit delayed household formation. I think their numbers look pretty decent today. Us Gen Xers, we always tended to be pessimistic. You can see our grunge generation or old Daria episodes for that. So I think that kind of fits with you know, kind of our perspective. Gen Z, you know they're back in what millennials were 10 or 15 years ago, where everybody feels like they're behind. But I will tell you, for all of these generations there's a huge waves of wealth transfer from inheritances from their parents, who are living longer and longer but also in many cases, have significant assets.

Speaker 1:

Speaking of parents, baby boomers emphasize the importance and value of income as security and I also know baby boomers really love long-term care insurance. It's much more difficult to get that insurance or plan for stable income if you don't plan a little bit earlier when you know if you used annuity planning which could create some stable income, fixed income planning or purchase long term care insurance earlier. All of those things are options which are preferred when you get to be a certain age, but easier planned for in many cases a little bit earlier. And then, finally, many workers have kind of a number targeted. I always hear people say can you just tell me how much I need to retire? And it's like well, tell me a little bit about yourself and then we'll talk about how much you need to retire later. But an EBRI study showed that for many people. They think that maybe they need like one and a half million dollars to retire and they just are not getting nearly enough savings Because for the average American, frankly, beyond Social Security, they really often don't have that much. In fact, in this study, a third of workers estimated they would need one and a half million to retire but currently would have less than $50,000 saved. And you know, I'm not surprised by that.

Speaker 1:

While it's difficult and disappointing, I think one of my goals for this podcast is for our listeners to be different than that third, to be in the top two thirds and growing where they are, you know, kind of taking the initiative to plan for their own success over time. We're going to keep bringing you retirement conversations because I know how important they are to so many people. I love reading retirement research. I'm sure you can hear that I'm just a geek when it comes to these financial planning topics, and so I hope that you, as you listen, understand a perspective that not everybody has it figured out.

Speaker 1:

You're not alone and also there are ways to plan and prepare. I see these in my day-to-day conversations with clients and would love to hear your feedback about what you want to hear about, but also what you've learned, whether it comes to retirement planning or what you want to know. Have a great week. Thank you for listening to the Women's Money Wisdom Podcast. If you found value in this episode, the best way you can support the podcast is to forward an episode to a friend or leave a review. Go to pearlplancom and the podcast link to get all the resources and links mentioned.

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Melissa Joy, CFP

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