More than half of Americans quickly ‘fail at retirement’, adviser says — here’s how to avoid falling into this one common trap that can tarnish your golden years

Most people dream of retirement — that magic moment when their worries about work and office stress are finally a thing of the past.

But that mindset is exactly what gets people in trouble, according to the founder of the Retirement Coaches Association, Robert Laura.

“I would say probably 50% — if not 60% — of people fail at retirement,” Laura told Moneywise.

Cutting off work as quickly and completely as possible results in many retirement newbies discovering they still want a job, either for financial or personal reasons.

Over half of Americans say they may still work after they retire and are even open to working “indefinitely,” according to a recent survey by financial services company Empower.

“Most people waffle around for a year or two before they figure it out and end up going back to work,” Laura says.

That year or two of lost time can set retirees up for financial and personal peril later on. Here’s how to avoid common mistakes — or remedy them, if you’re already retired.

You don’t need to retire right away

Retiring at 65 has long been common practice likely because that’s when you become eligible for Medicare and many private pension plans begin paying benefits. But that doesn’t mean that you should hang up your hat on your 65th birthday. In fact, it may benefit you to wait a few more years.

Let’s say you’re 65 and you have $1,000,000 set aside for retirement. You’re going to get an average of around $1,500 per month from Social Security and you’re planning to spend the average $57,818 a year in retirement.

According to the T. Rowe Price Investment Services retirement calculator, you have an 84% chance of having enough money to last your retirement.

If you wait until 70? Even if you didn’t increase your savings over that time, your Social Security benefit would rise to an average of around $1,960 per month — and your probability of success rises to 96%.

It’s the same with Social Security. Technically, you’re not even eligible for your full Social Security benefits until age 67. If you start getting your payments at age 65, you only get 85% of your full benefit payment.

Plus, you get a bigger payout if you wait even longer and start taking your Social Security at 70. A financial adviser told USA Today that a “couple can receive as much as $500,000 more in total benefits if they delay claiming,” assuming the average lifespan of 84 years for men and 87 years for women.

With the Social Security cost-of-living adjustment only increasing by 3.2% for 2024 – a significantly smaller amount than 2023’s 8.7% increase – many retirees are worried about about their monthly expenses, according to that same Empower survey.

Personal finance celebrity Dave Ramsey’s company conducted a study that found many people with middle-income jobs become 401(k) millionaires by the time they retire, simply because they took advantage of their employer’s 401(k) matching program and made consistent contributions to it themselves.

Just by taking the time to make sure you’re taking full advantage of your company’s 401(k) plan, you can get rid of some of the financial anxiety that comes with saving for retirement.

If you’re unsure how best to take advantage of the various types of retirement accounts or you just don’t know how to start planning for retirement, consider talking to a financial adviser who can help make a plan that allows you to have the retirement you want.

Consider “intermittent working”

Once you hit retirement age, it doesn’t mean you have to stop working.

According to U.S. Census projections, all 73 million U.S. boomers (born between 1946 and 1964) will be at least 65 by 2030. This means that a larger proportion of the U.S. population will be in range of or in retirement over the next decade.

But at the same time, the number of workers over the age of 60 has roughly doubled since 1984.

“I think a lot of people have gotten to be age 55, 60 or 65, and they followed the script on what they’re supposed to do: go to school, work hard, get a good job,” Laura says. “But now they’re going to get to these traditional retirement ages and they’re realizing the gas tank’s not empty.”

Laura recommends that retirees try “intermittent working,” which he compares to intermittent fasting: working for only some of the time. He used the examples of getting a seasonal job so that you can spend the summer months with family and friends or a part-time role that allows you to work in the morning and golf in the afternoon.

But some companies are adjusting to these demographic changes by welcoming back their retired workers for full- or part-time opportunities. A New York Times article details how some Vermont businesses are doing this because 20% of the state’s population is over 65. Boomers are in a “power position” in their workplaces to extend their careers, according to Jessica Tuman, head of Voya Cares and ESG practices at Voya Financial, a retirement, investment and insurance company.

“They do have the expertise to fulfill the roles and there’s no sort of training required,” she said. “So I think there’s a lot that they can ask their future employer.”

Don’t be afraid to have a conversation with your boss to see if transitioning to a part time position is something they would be open to, especially if they can’t afford to lose you to a full retirement.

Retirement can take a personal toll

Though delaying retirement can help you financially and keep you busy, it can also help with the often unspoken emotional toll that retirement takes on many people, according to Laura.

“A lot of people don’t realize the psychological benefits that work gives you is social interaction,” he says. “It keeps you mentally stimulated, it gives you purpose and direction.”

When people retire, they feel lonely, bored and unfulfilled, according to the Retirement Coaches Association’s 2023 survey. Even if they disliked their job, they had somewhere to go every day, something to do and interacted with their colleagues.

Retirement often means people have no structure, they’re at home all day with their spouse (who they didn’t see that often before) and they have to fill their days with hobbies. It can get tedious.

But there are ways to remedy this and enjoy your retirement, you just have to plan for it.

Laura encourages people to start thinking about how they want to spend their days in retirement – but a few years before you actually retire. If you’re a type A personality, you won’t want to sit at home watching TV all day. So what do you want to do to feel productive?

“That’s probably the biggest thing we try to teach people is: you’re going to lose more than you gain and you need a way to replace these things,” Laura says. “Because if you don’t, you’re going to feel out of sorts.”