Going from saving to living in retirement

Key takeaways

  • It's OK if you get a late start to saving. A flexible plan can help you take advantage of opportunities to boost your savings or otherwise improve your financial picture.
  • As retirement nears, consider exploring sources of predictable income for essential expenses, including Social Security, pensions, or income-producing annuities. Cyndie and Mark used a well-considered strategy for Social Security benefits and put part of their savings into income-producing annuities to help cover expenses.
  • Use insurance to protect what you have. Cyndie suffered a career-ending injury but was able to recover part of her income because of disability insurance. Buying long-term care insurance has given Mark and Cyndie peace of mind about their future needs.
  • Cyndie and Mark wanted to be able to see their own doctors so buying a Medicare supplement plan was an easy choice that fit into their budget. Be sure to investigate Medicare options to get the health care you need at a cost that is reasonable for you.

Training dogs, tending to organic vegetables, and pedaling a mountain bike across rugged terrain in the wilderness—not a bad way to spend a week.

That's the rhythm of Mark and Cyndie's retirement lifestyle. The South Florida residents, age 70 and 69, respectively, have eased into phase one of retirement and, it's, well, working for them.

For years, the couple was confident that they could land in a place where they could retire how and when they wanted to. And they have.

Their success factor: For more than 3 decades, they conscientiously saved in employer-provided retirement accounts.

Not surprisingly, however, the precise details of what they had envisioned their lifestyle to be evolved over time. And that's all good.

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Late to the game

The keystone of the couple's financial plan was simple—setting aside as much of their income as possible in tax-deferred savings plans. "When we got married, I was 32, and Mark was 33," Cyndie said. "I had an IRA that I had contributed to, but Mark had zero retirement savings. We decided we needed to do something because we felt like we came to the game rather late."

That's when Mark, a trial attorney, kicked off his practice of making the highest contribution he could to his employer's 401(k) plan. "We like to spend what we have, so it was better to take the savings out before we saw it, and we made it work from there," Cyndie said. "We've been very fortunate to be able to do that."

As he shifted employers over the years, Mark never let up on his contributions—averaging around 12% of his gross salary annually. "We were just saving money, saving money, saving money," Cyndie said.

Read about Fidelity's guidelines for retirement savings: Retirement roadmap

Seeking out financial advice

Ten years ago, the couple hired a financial professional to help them put a retirement plan together and consolidate their various retirement saving accounts, spread primarily among 3 of Mark's former employer's 401(k) plans. "I'm not a savvy investor," Mark said. "I watched my father struggle doing self-investing. My parents lost some money. I was not going to try to self-invest and figure out the market."

By the time Cyndie and Mark met with a financial professional, they had combined retirement savings of nearly $1 million in various accounts. They opted to invest part of those savings into 3 income-producing annuities, which they began drawing on last year. Those annuities now provide roughly $5,000 a month in income. "The decision to put a chunk of our retirement savings in annuities gave us guaranteed income,1 regardless of what the market does," Mark said. The rest of their savings are invested in a previous employer's 401(k).

Read Viewpoints on Fidelity.com: Considerations for an old 401(k)

Estimate what your monthly income could be with an income annuity: Guaranteed income estimator

Work as part of a retirement plan

In the meantime, Mark has continued to work part time. "Nearly 5 years ago, I began logging in 16 to 20 hours a week at my friend's law firm, mainly because I want to stay busy," Mark said. "I'm very good at what I'm doing. My main client loves me, so I'm going to do it for a while."

That cash flow makes a difference. "If we didn't have that extra income, we'd have to make some different lifestyle choices," he said. "And to be honest, it's turned out to be a good choice since my existing 401(k) from my last employer, which we did not put into an annuity, is down 40% so far this year, and inflation is off the charts."

The high cost of living has sparked some anxiety. "I didn't think we would need to be so careful, but we've been watching our purchases and keep daily spending in check," Cyndie said.

There were obstacles to overcome along the way

After a fall, Cyndie, then 52, who was working as a court reporter, stepped out of the workforce. As an independent contractor, fortunately she was covered by a disability policy she bought herself. When a hand surgeon declared her disabled, she decided to retire and tap into her coverage for a portion of her previous earnings.

At 65, she decided to start taking her Social Security benefit, which is currently around $1,000 a month after-tax.

Mark, however, waited until his full retirement age of 66 to begin taking his Social Security benefit, which provides around $2,400 a month after-tax.

Wondering about your own Social Security benefits? Try our Social Security Benefits Calculator

Read Viewpoints on Fidelity.com: Social Security tips for working retirees

A shifting retirement vision

Staying in South Florida was not their plan for this chapter, after their 3 children launched into adulthood. "If you roll the clock back about 20 years ago, we had fantasized about moving to Tennessee and living in the mountains," Mark said. Instead, 9 years ago, the couple chose to relocate to a rural area a few miles down the road from the home they had lived in for 22 years. "It's kind of the best of both worlds," Cyndie said. "We have the room we need to do the things we love to do."

For them, that means space to train dogs, including a rescue and 2 poodles, mostly for competition. "I'm also working toward having one of my younger dogs ready to do therapy work and participate in a reading program where children read to gentle dogs. It helps the children gain confidence reading," Cyndie said.

Talk about puppy love.

Mark's dog-training endeavors are geared toward scent-work. "My wife says it's like watching paint dry," he said. "For me, it's just like what you see on the cop shows. The dog is going to go search the car, and he's looking for cannabis, cocaine—bomb dogs even sniff out ammonium nitrate." For Mark's trainees, though, it is searching for tamer things like the smell of anise or clove.

Gardening has also emerged as a new hobby for the couple, with green beans, kale, tomatoes, cucumbers, and radishes vying for their time. "Our garden sometimes flourishes and other times not so much," Cyndie added.

Then too, they've been able to carve out time to volunteer at their church. "Our faith is a part of our life," Mark said. "I teach around 70 Sunday school students each week and also do a bit of prison ministry work."

For Mark, their retirement move to a more rural area appeals to the athlete in him. While basketball, marathon running, and triathlon have all won his heart over the years, the torch has passed to mountain biking.

But the main reason they wouldn't move to Tennessee any time soon: "We have 3 grandchildren living 45 minutes away, and we help take care of them," Cyndie said.

Health care costs can't be ignored

According to the Fidelity Retiree Health Care Cost Estimate, an average retired couple age 65 in 2023 needed approximately $315,000 saved (after-tax) to cover health care expenses in retirement.2

The couple is aware of that potential hit. For now, they are enrolled in original Medicare, buy supplemental coverage to protect them from potentially high out-of-pocket costs, and have Part D prescription drug plans.

"Our premium for our supplemental coverage is around $567 a month, and it's worth it," Mark said. "We love our ability to go to the doctors we know as opposed to having a Medicare Advantage plan with restrictions on who we could use as providers."

The couple also has a long-term care policy they bought 20 years ago when it was an option offered by one of Mark's employers.

A smart move—the reality is that in America, someone turning 65 today has almost a 70% chance of needing some type of long-term care in their remaining years to assist with performing everyday tasks.3 When someone needs long-term care, the expense is generally in addition to the $315,000 (in present-day, after-tax dollars) that a couple could expect to pay for health care in retirement.

"Having seen a parental decline on both sides, we knew it made sense," Cyndie said. "Mark's parents had a policy with wonderful provisions," she said. "My parents didn't, and it was financially crushing. It is a big bill every month, but I would rather have it than need it and not have it."

Costs in retirement

Aside from a mortgage, the couple is debt-free. And for now, the equity in their home is on the rise. "Our home has probably tripled in price in the last 10 years," Mark said.

And although caring for their dogs doesn't come cheap, they keep their day-to-day spending in check. "We're not extravagant," Cyndie said. "We're homebodies. Now that we're retired, we cook and stay at home a lot more than we did when we were raising our kids. And while we've been able to travel, it's not to the extent that I always thought we would."

Read Viewpoints on Fidelity.com: Ready to retire? You still need a budget and How to spend less in retirement

Tips for future retirees

Knowing that they have a plan in place has brought them peace of mind, but they do wish they had started sooner.

"Start saving as much as you can, as often as you can," Cyndie said. "And be flexible."

Mark agreed: "Our plan now is different than it was 20 years ago," he said. "We like what we're doing, though. It's not always smooth sailing, but you can make it happen."

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Annuity guarantees are subject to the claims-paying ability of the issuing insurance company.


Estimate based on individuals retiring in 2023, 65-years-old, with life expectancies that align with Society of Actuaries' RP-2014 Healthy Annuitant rates projected with Mortality Improvements Scale MP-2020 as of 2022. Actual assets needed may be more or less depending on actual health status, area of residence, and longevity. Estimate is net of taxes. The Fidelity Retiree Health Care Cost Estimate assumes individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s insurance program, original Medicare. The calculation takes into account Medicare Part B base premiums and cost-sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance). It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by original Medicare. The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care.

3. Based on the Department of Health and Human Services Long-Term Care Information as of February 2020.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

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