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Financial Planning for the Retirement Transition

Dr. Barbara O'Neill November 7, 2022

Couple enjoying retirement

Periods of our lives are often categorized into phases. As we move through life, change is inevitable, but that doesn’t make it less intimidating.

Your clients—and prospective clients—face a myriad of changes in their later years. Whether they are on the cusp of retirement or living as a retiree, this is an impactful time of transition.

Navigating the Retirement Transition with “Switches”

Because the transition to retirement is dynamic and requires financial, lifestyle, and social choices, clients need a full understanding of their “switches” or options.

Clients will need to turn things on, like activating Social Security benefits, and turn things off like downsizing any recurring expenses that no longer fit their lifestyle. Additionally, they may need a dimmer switch to illustrate how a choice may evolve over time. For instance, your client may want to retire from working full-time but decide they would like to work part-time for a period to supplement their income.

As a financial professional, you want to help prepare clients for all the “switches” they may face. In my book—Flipping a Switch: Your Guide to Happiness and Financial Security in Later LifeI discuss over 15 financial engagement topics to support clients as they go from someone saving for retirement to a retiree who must now manage those savings.

Creating Financial Organization and Simplification for Clients

Preparation is key in any life plan. Getting organized with a financial inventory will give your clients a sense of relief and satisfaction.

It’s valuable for them to have a comprehensive list that is shareable with their family, legal advisors, or other affiliated parties. Establishing a full view of their financial life also helps them take any steps necessary to begin consolidating financial assets.

Navigating the Complexity from Asset Accumulation to Decumulation

It can be difficult for clients to decipher when they have enough. This is where your advice is invaluable. Financial professionals have access to reliable tools such as savings calculators, spending projections, and Monte Carlo analysis. These resources can help them decide when they have “enough” and need to switch from saving to spending.

Many of you today likely have clients in that “save, save, save” mindset. According to habit formation hypothesis, people get accustomed to a certain lifestyle. And whether it’s spending—or saving—habits are hard to break. As their advisor, it’s your job to help them step outside their spending comfort zone. Ask them some tough questions about what they envisioned for all their savings and, perhaps more pointedly, what they are waiting for.

Support them by creating new habits. For instance, setting up an automatic withdrawal plan or a regular “paycheck” can help them see a more predictable pattern with their money.

Adjusting to a New Tax Situation

Taxes in life are certain, however, tax legislation does change and could influence future rates. There are tax advantages—and disadvantages—clients must be aware of later in life.

For instance, retirees can end up in a higher tax bracket than they expected. Everyone tells them they will be in a lower tax bracket in the future but that isn’t always the case, especially with multiple income streams. A financial professional can discuss tax withholding strategies.

In addition, this is a time when your client or their spouse may become a Social Security beneficiary. Earnings limits come into effect, as do age-related requirements, such as required minimum distributions (RMD). Financial professionals play a role in educating their clients about the nuances of the RMD rules so they can be prepared with a spending plan.

Setting New Financial Goals

For many folks, retirement is the finish line of their financial goals. However, as clients adjust to new spending and saving amounts they need to set “through retirement” goals.

You have likely heard the expression, ‘You can’t take it with you.’ Some clients are going to need additional support in developing an action plan to draw down their assets. You could encourage them to try new experiences or automate some spending and gifting.

A spending goal for some may include philanthropy. Assist clients by specifying a purpose and plan for their donations with a gifting budget. This is also a great opportunity to deepen the client relationship by getting to know the potential charities your client is interested in.

Help Pre-retirees and Retirees Flip the Switch

Financial professionals play an invaluable role in defining what success looks like leading up to and through the retirement transition. Most importantly, you can build your clients’ confidence during this time of change by educating them about their switch options and even illustrating those “light switch” moments in a financial planning platform.

To learn more about the financial, lifestyle, and social transitions that happen later in life view this on-demand webinar.* I am joined by Joseph Buhrmann, CFP®, CLU®, ChFC® to discuss how a robust and engaging planning platform can help facilitate planning discussions around transition by modeling some of life’s what-ifs.

*Please note, CE credit will not be awarded for an on-demand webinar.


The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

The views and opinions expressed by this blog post guest are solely those of the guest and do not necessarily reflect the opinions of eMoney Advisor, LLC. eMoney Advisor is not responsible for the content, views or opinions presented by our guest, nor may eMoney Advisor be held liable for any actions taken by you based on the content, views or opinions of the guest.

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About the Author

Barbara O’Neill, Ph.D., CFP®, AFC®, CRPC® is the owner and CEO of Money Talk: Financial Planning Seminars and Publications where she writes, speaks, and reviews content about personal finance. She is a distinguished professor emeritus at Rutgers University, after serving for 41 years as a Rutgers Cooperative Extension educator and personal finance specialist. She has written over 190 articles for academic publications and received over 35 national awards and over $1.2 million in grants to support her financial education programs and research. Dr. O’Neill is a past president of the Association for Financial Counseling and Planning Education (AFCPE), a recipient of the AFCPE Distinguished Fellow Award, and a Next Gen Personal Finance fellow. She tweets personal finance information @moneytalk1, writes weekly posts for her Money Talk blog, and is the author of Flipping a Switch, a book about 35 later life transitions, published in 2020.

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