It’s tough to estimate exactly how many Americans retire on any given day. But estimates say that roughly 10,000 baby boomers turn 65 in any given 24-hour period, so it’s probably safe to estimate that, each year, hundreds of thousands of people are going to be experiencing retirement for the first time. Ready or not, that first year of retirement is coming for most of us. The question is, how prepared will we be? 

This week we came across an interesting article from Kiplinger in which financial writer Jacob Schroeder makes a provocative observation: how we spend Year One of retirement will have a profound impact on the rest of our retirement years. That means, if you were to retire today at age 65, how you spend the next 12 months can very likely chart the trajectory for your next two or even three decades. 

Why is the first year so impactful? Is Schroeder on the right track with his observations? We were curious, too. Let’s dive in. 

Like College, Retirement Marks a Season of New Beginnings 

Schroeder begins with an unlikely comparison: how is starting college like starting retirement? “While the first year of retirement generally features fewer keg parties, football tailgates and all-nighters,” he answers, “it shares one unique similarity with college: it’s a new beginning.” 

There’s also another, more troubling, similarity.  Like college, says Schroeder, retirement offers people “a time to spread their wings and discover — or rediscover — their sense of self. And, like college, if you take too much advantage of that freedom and neglect your responsibilities, it can hurt the whole experience.” 

He gives an example of one anonymous woman who retired with a large pension after a 30- year corporate career.  Without a financial plan in place, she quickly began living a luxury lifestyle with extensive travel and generous family gifts. But, says Schroeder, a “surprise tax bill” quickly brought her back down to earth and caused her to seek guidance. “Fortunately, with a financial adviser’s help, she got her finances back on track, allowing her to still enjoy her savings but with greater intention.” 

Year One of Retirement: Creating a New “Relationship with Money” 

For his article, Schroeder spoke with Renee Collins, founder of Retire Ready Inc . “The first year of retirement is one of the most defining periods in a person’s financial life,” she says. “It’s not just about leaving the workforce — it’s about creating a new identity, routine and relationship with money.” 

Schroeder observes that most of us are poorly prepared to make the leap from salaried worker to retiree. “In fact,” he writes, “the Financial Planning Association’s 2025 Trends in Retirement Planning survey reports that just more than half of planners think their clients are financially prepared for retirement, and only 11 percent believe they are emotionally prepared.” 

Part of the great challenge of preparedness involves the sheer scope of what we call retirement. “It could span a third of your life,” Schroeder writes. “And while every year matters, experts say the first may stand apart. It can trigger mistakes that snowball, or set the stage for a fulfilling second act. After all, you don’t want to live the same year 30 times and call it a retirement.” 

During the First Year of Retirement, New Routines Take Hold 

Schroeder also interviewed Scott Van Den Berg, president of Century Management, about the importance of the transitional first year. “In my experience, the first year of retirement sets the tone — both financially and emotionally,” says Van Den Berg. “Old routines fall away, and new habits — good or bad — start to take hold.” 

Some have even called early retirement the “go-go years,” a time when new retirees are most likely to spend their money and their new-found freedom completing those bucket-list experiences. (These “go-go years,” the old saw goes, are followed by the “slow-go years,” then the “no-go years”!)  

Spending Tends to Drop as Retirees Age  

Schroeder quote the 2024 Consumer Expenditure Survey, which reported that the average annual spending for adults aged 65-74 was $65,149.  But by age 75, that spending figure had declined to $53,031 – a drop of some 20 percent. This likely reflects that older retirees tend to spend their money and time closer to home. 

“There’s a risk of getting too comfortable with this early level of spending, potentially jeopardizing savings meant to last decades,” says Schroeder. “But the opposite risk is also real: scaling back too far and living in ‘preservation mode,’ which could mean missing out on goals and experiences you could otherwise afford to enjoy.” 

Year One of Retirement Can Also Feel Like a “Honeymoon” 

The endorphin rush of early retirement can trigger a kind of “honeymoon phase” with the physical and mental boost that newfound freedom brings. “But that boost may be shorter-lived than many expect,” Schroeder warns. “One study found that after just two years in retirement, that effect had largely disappeared, as retirees adapted to their new reality.” 

Sadly, the emotional build-up of early retirement can quickly be followed by a letdown. The restlessness, boredom, and lack of purpose many experience in retirement sometimes drive able-bodied seniors to “unretire.”  Schroeder writes, “The pandemic spurred 2.4 million ‘excess retirements’ in 2020, according to a T. Rowe Price analysis of Federal Reserve data. But by March 2022, about 1.5 million retirees had already ‘unretired.’” 

(Check out this Blog article about the benefits of unretirement, published last spring.) 

“Year One” Rule of Thumb: Go Slow on Big Decisions 

Schroeder’s Kiplinger article offers this bit of sage advice: it’s probably wise to exercise caution in making any big, costly decisions during Year One of retirement. 

“In the excitement of newfound freedom and a well-stocked nest egg,” Schroeder writes, “it’s tempting to splurge. Van Den Berg calls this the ‘victory lap phase.’”  His suggestion: “Pause before making any big, irreversible decisions in the first 6–12 months.”  

The rationale makes sense, says the article, because retirees need “time to adjust, both emotionally and financially, before locking in major choices like large gifts, home renovations or claiming Social Security.”  (We don’t understand why Social Security is on this list: hopefully you will have determined your likely benefit claiming strategy long before Year One begins.) 

Retirees Need to Create and Follow a Retirement Income Plan 

Retirement planner Collins emphasizes the need for a retirement income plan to avoid overspending. We would argue for a much more powerful tool: a financial dashboard. 

“Newly minted retirees might receive a lump sum from a pension or 401(k), feel a false sense of security, and start spending freely without understanding the long-term impact or tax consequences,” she says. “This can create problems that are hard to reverse, especially when those funds are meant to last decades.” 

A withdrawal strategy that Collins calls “realistic and sustainable” will help provide clarity and give you the tools you need to set spending limits. (We wrote about RMD withdrawal strategies here on the Blog just last week.) 

Of course, Rajiv Nagaich takes a more comprehensive approach. What retirees need, he argues, is a financial dashboard, not just a spending plan. You’ve no doubt heard him describe this invaluable planning tool on the radio and in his workshops. Contact us and we’ll gladly explain more – and refer you to a professional planner who can guide you. 

Year One of Retirement: It’s Much More Than Money 

In the article’s final section, Schroeder emphasizes what may be the most important aspect of the first year of retirement. He says this period is “when people either lean into purpose, or drift into uncertainty.” 

Schroeder quotes a research study which found that retirees who leave work on their own terms have much lower rates of depression than those who were forced to retire. For these unwilling retirees, mental health decline was a very real danger. Getting off to a positive start seems like a good way to launch retirement on a healthy trajectory. 

For his article, Schroeder asked retirement planner Dana Anspach to comment on this aspect of retirement. “For those with abrupt transitions,” says Anspach, founder of Sensible Money, “that first year of retirement is critical to what comes next.”  Her advice is to turn retirement into a season of exploration. 

“Be curious,” she urges. “Explore new activities. Try new things. Say yes to everything, but don’t make any long-term commitments. Pay attention to what gives you energy and do more of it.”  

Retirees Need to Anticipate a Time of Emotional Adjustment 

Anspach told Schroeder that, for many if not most retirees, a period of emotional adjustment is inevitable. “You may go through the stages of grief — denial, anger, bargaining, depression and finally, acceptance,” she says. “Give yourself grace to work through these natural emotional cycles.” 

It’s also important to remember that Year One of retirement is just that – the beginning of a new journey. “For a 65-year-old couple today, there’s a 50 percent chance that one partner will reach 90,” Schroeder writes, “and a 20 percent chance one will reach 100. With rapid advances in healthcare and technology, the odds of living a healthy, active life late into old age are improving.” 

The conclusion seems clear: pay attention to Year One, but at the same time look beyond it to what lies ahead. “Perhaps the better way to view retirement isn’t in terms of years, but decades,” he writes.  

We especially like the Bill Gates quote that closes out the article: “Most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years.”  Or as Rajiv puts it, “Age on!” 

Rajiv Nagaich – Your Retirement Planning Coach and Guide 

The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public. Retirement: Dream or Disaster joins Rajiv’s ground-breaking DVD series and workbook, Master Your Future, as a powerful planning tool in your retirement toolbox. As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.  

You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read. 

Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more. 

Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.  

Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important message. And remember, Age On, everyone! 

(originally reported at www.kiplinger.com)