7 habits of highly effective retirees


We’ve often been told that effective people cultivate and practice effective habits. That while everyone’s situation is different, certain consistent patterns of behavior increase one’s chances of success. This applies to individuals, families, and companies; hence we have the seven habits of highly effective people, teens, families, and entrepreneurs.

The same holds true of retirement. Although everyone’s retirement is different, there are some habits that retirees can cultivate to increase the odds that their golden years will be many and fulfilling. Below we propose seven habits of highly effective retirees.

1. Highly effective retirees have a realistic plan. Like all endeavors, a successful retirement requires a workable plan. As the saying goes, “failing to plan is planning to fail.” It’s hard to reach your destination without a roadmap. A plan for a successful retirement includes:

  • A vision of what retirement will look like. You will benefit immensely if you have a clear picture of what you want to do during your retirement.
  • A financial plan for how you will bring your vision to life. You will want to keep a detailed budget showing your income and expenses in retirement.

2. Highly effective retirees manage their finances effectively. A big concern for many retirees is running out of money. This is where your budget is valuable. By tracking how much is coming in and where it’s going, you can help ensure that your retirement funds last as long as you need.

Many retirees carry significant debt into retirement. If you’re carrying mortgage, credit card, or student debt as a retiree, you undoubtedly know that making these continual payments is eating into your retirement income. You’ll want to close out these debts as quickly as possible, possibly with the help of a qualified financial advisor.

Effective retirees also have their savings in an appropriate mix of aggressive and conservative investments. While previous generations of retirees were advised to stay conservative with their investments, the current advice of many financial advisors is to maintain some exposure to stocks so that your retirement savings grow fast enough to keep up with your withdrawals. Recent financial research indicates the optimal approach may be to be more conservative at the beginning of retirement, then gradually increase exposure to stocks later in retirement.

Because the market is so unpredictable, you want to avoid withdrawing from your savings during a downturn. That’s why effective retirees also maintain a cash emergency fund in order to be prepared for unexpected costs that inevitably come up.

As soon as the freedom of retirement hits, many people are tempted to splurge on those luxuries and hobbies they never had time for while they were working. A luxury car, boat, or vacation home may be nice to own, but many people aren’t prepared for the long-term costs. Investorjunkie suggests a way to have the best of both worlds.

3. Highly effective retirees are flexible. This doesn’t mean that you can touch your heels with the back of your head (although that would be impressive). It means effective retirees adjust their plans to meet changing circumstances. Economic conditions change, the stock market changes, laws change, and your personal situation changes. Over a retirement that may last decades, you will undoubtedly have to adjust your savings withdrawal rate and your investment allocation to match.

Effective retirees take advantage of opportunities as they arise. For example, as a retiree you’re eligible for many senior discounts at restaurants, stores, and attractions. You can also adjust your travel plans to take advantage of off-peak discounts.

One of the biggest unknowns is the timing of retirement itself. Sixty percent of American workers end up leaving the workforce earlier than expected, for various reasons. You will want to be prepared if this happens to you. That’s why it’s good to start planning several years before your expected retirement date.

4. Highly effective retirees take care of their health. Saving and investing are crucial to a satisfying retirement. So is making investments in your health. Good health is necessary for you to enjoy all those activities you have planned for your golden years, whatever they may be.

Simple steps like quitting smoking, maintaining a healthy weight and diet, and regular exercise can go a long way. Regular health checkups and including a specialist in senior health (gerontologist) on your healthcare team can help you maintain your quality of life and detect any health problems early.

Equally important is your psychological health. Persistent sadness is not a normal part of aging. Engage in activities that lift your mood, such as reading favorite books, watching comedic movies, or walking outside. If you or a loved one have persistent or recurring feelings of sadness, seek qualified help, preferably from a medical professional who specializes in psychological health of older adults. The strong mind-body connection means that depression and other psychological disorders leave people more vulnerable to dangerous physical conditions such as heart disease, stroke, or pneumonia.

Effective retirees also pay attention to their spiritual health. Not necessarily in a religious sense, but in a sense of maintaining connection to something greater than everyday life. Recent research suggests that spirituality can help people cope with the stresses of living and promotes good physical and mental health. Regular walks in the park or the woods, looking at the stars at night, and surveying the view from a mountaintop can help you maintain your connection to nature. Meditation, yoga, quiet reflection, and private prayer are some other common ways to keep in touch with your spiritual side.

5. Effective retirees have healthy social interactions. An unfortunate tendency on the part of many retirees is to become socially isolated. Without the daily interaction they get at work, many retirees simply fall off the map. This isolation can be hazardous to your physical and mental health. People are social by nature and are simply not designed to be alone. There are many ways to increase regular social contacts, such as

  • joining a group organized around a common interest like walking, biking, sewing, reading, etc.
  • volunteering in a local charitable organization
  • working part-time outside the home
  • taking a class
  • visiting relatives and friends

6. Effective retirees are optimistic. Your mental and emotional outlook has a huge effect on your health and longevity. A positive, optimistic attitude can add years to your life and improve your quality of life during those years.

Although optimism is in small measure a product of genetics and circumstances, in large part it is a matter of choice. Simply choosing to see the brighter side and have positive expectations about events and interactions with other people can cultivate the habit of optimism. Since optimism and a positive outlook are contagious, it also increases the chances that the majority of your interactions will be positive.

7. Effective retirees give back. We don’t mean to sound preachy here, but research suggests one key to a satisfying retirement is getting involved with a worthy cause by donating your time and other resources. Giving back can contribute to a sense of purpose and provide social contacts, two important aspects of life that many people lose when they retire.

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