Income Strategies for Adventurous Retirees

Let’s talk about Christine.

Maybe you know her. Christine has a popular and quirky TikTok feed about exotic flowers. She also works part time at a high-end florist in Atlanta. That gives her time to be a champion player at her local tennis club, though she’s considering running a marathon.

In her latest TikTok from a Rolling Stones concert, she showed off flowers that Bill, her new boyfriend, gave her.

Also, Christine’s 75 and retired.

Don’t believe it? Christine is actually an amalgam of retired women and men living today. Retirement in 2025 is beginning to look more like Christine’s life and less like dropping out of the workforce and going gently into that good night.

The new face of retirement

It shouldn’t be too surprising that today’s retirees are frequently as active and adventurous as they were before retirement and maybe more so.

Many in their 70s may feel and look much younger these days. Medical advancements have not only extended longevity but made joint replacements and cosmetic procedures common.

Those who are 65 years old will live about another 20 years, on average, (men, slightly less, and women, slightly more), according to the latest Social Security Administration stats.

Retirement can be more about leaving the daily nine-to-five grind rather than not working at all. More retirees pursue their passions with a part-time “fun” job to retain social connectivity and a sense of purpose. Almost 20% of those aged 65 and older were employed in 2023, which is nearly double the amount 35 years before.

Punk rock and hip hop

While grandchildren may still be part of the picture, retirement has become a time where you can shed past obligations and restrictions and forge new paths. Witness the emergence of “gray divorce.”

If you’re about to retire, you’re part of the generation that listened to punk rock and hip hop, so if you don’t want to give up the attitude that goes along with it, more power to you.

The question becomes what are some of the income strategies to afford a more active and adventurous retirement than those of yesteryear?

The math behind the new retirement

Guidelines vary around the percentage of preretirement income needed annually in retirement, but they fall somewhere a bit below and above 80%. At Edelman Financial Engines, we tailor income replacement in retirement and all our financial planning to an individual’s needs.

Think carefully about the kind of life you want to live in retirement and what it will cost. In retirement, you will face inflation, changing investment conditions and rising health care costs, factors that you can’t control.

Want enough income in retirement? Focus on the things you can control, like staying invested, and just as importantly, saving and spending.

“We can help get you to your retirement goals with strategies for investing and tax planning and more,” said planner Kelli Smith, Director, Financial Planning at Edelman Financial Engines. “But those strategies won’t do any good if you don’t have a realistic sense of what you will want to spend and then saving for it.”

Be flexible

What happens when your vision for your retirement changes? Your retirement spending and savings needs may need to change along with your financial plan.

When you first imagined your retirement in your 40s, perhaps you thought you would live near your kids and grandkids. However, as you approach retirement, your priority may now be to travel and pursue adventurous hobbies.

Your spending needs could change during your retirement as well if you develop different interests and unexpected events occur.

“Flexibility is a critical ingredient in having a successful retirement today,” said planner Dale Hansen, Director, Financial Planning at Edelman Financial Engines.

Income strategies to create flexibility

Let’s say you become an avid cyclist as you near retirement and you want to take cycling holidays all around the world. You didn’t start saving for this passion until recently, so your retirement will have higher costs than anticipated. This is one of a number of ways a more active retirement could drive up costs.

Keep in mind this translates to higher costs in the first part of your retirement, not the entire time. Let’s consider five strategies to help you afford your most active years of retirement.

#1 A part-time job

A part-time job early in your retirement obviously provides income. It also can be a job in an industry you love but never got a chance to work in. For example, our hypothetical would lend itself to working in a cycling shop or something related to endurance sports.

A part-time job is a good way to transition out of full-time work; otherwise, you could feel a loss of purpose or social connectivity that full-time work may have provided. Depending on the company’s policies and hours you work, a part-time job could allow you to contribute more into a 401(k) and even receive health care benefits. The latter is particularly helpful if you’re planning on retiring before Medicare eligibility at 65.

#2 Delay retirement for a couple of years

If you believe you will need to boost savings to support a retirement that will be more active than anticipated, it could help to delay retirement for one to three years. This doesn’t necessarily mean staying in your current nine-to-five job. It could mean a less stressful full-time job that pays less but still provides all the employment benefits. Delaying retirement has three benefits:

1. It’s another year at least of employer-matched 401(k) contributions.
2. It could be one more year of investment growth, depending on the markets.
3. A one-year delay in retirement is one less year of portfolio withdrawals.

#3 Healthy cash reserves

Cash reserves can create a flexible retirement plan needed for an active retirement. We recommend cash reserves that can support 12 to 24 months of living expenses in retirement.

If you have enough cash savings, you can rely on them rather than portfolio distributions when the market experiences an extended period of volatility. That way, you’re not locking in losses with portfolio withdrawals during this period and can allow your portfolio the opportunity to recover. The better your portfolio does, the more you can afford those retirement adventures. Also, cash reserves come in handy when the unexpected happens – and it could in some form or another.

#4 Sell unneeded possessions

Let’s say you’re nearing retirement and you need to boost cash reserves. You may want to look at your possessions. If you have a vacation home that you use for just a month each year or a classic car that you hardly ever drive, do you really need it? You may have wanted to leave certain possessions to your beneficiaries but ask if they really want them. If not, it’s better you get the value by selling them if they’re just going to sell them anyway.

#5 Tax-smart distribution strategies

One of the best ways to optimize your portfolio income is by devising tax-smart withdrawal strategies.

For example, if you have a variety of retirement accounts, like a Roth IRA, 401(k) and taxable account, you and your financial planner can work with a tax professional to create different withdrawal combinations during your retirement that have a lower tax impact. However, if you just have a pretax account like a 401(k), you can still create tax-efficient withdrawal strategies.

Let’s say you know you will need to make a big purchase, like a new car, about five years into retirement. Rather than taking a lump sum from your 401(k) and driving up your income taxes and your Medicare premiums (which are impacted by your income level), you could take an extra withdrawal amount each year leading up to the purchase.

On the other hand, your old car may unexpectedly not last as long as you anticipated, and you may need a new car immediately. Rather than buy it outright using a lump sum from your 401(k) and paying taxes on that, it may be cheaper to finance it and pay the loan down in three or four years. Again, being flexible with your finances in retirement is critical.

Next steps

These are just some of the income strategies for you to consider as you approach retirement, or more accurately, your “next chapter.”

By leveraging your existing financial plan and investments, your planner can help you create a personalized road map to living your next chapter to the fullest.