How to Thrive in Retirement: The Simple Plan Most People Skip (And Why It Matters)

A lot of people do the hard part of retirement planning first: they save. They contribute to a 401(k). They open an IRA. They invest consistently for years. And then, right when it’s time to actually use the money, they realize something uncomfortable… they never built a real strategy for how retirement is supposed to work. That’s the difference between “retiring” and actually thriving in retirement. Saving money is important. But saving without a plan is like packing for a trip without knowing where you’re going.

The retirement planning problem nobody wants to admit

Here’s the reality: 75% of Americans are basically winging it when it comes to their financial strategy. That doesn’t mean they’re irresponsible. It just means they’ve never built a clear system for how their income, investments, and spending are supposed to work once the paychecks stop.

And that’s where things can break down. Retirement isn’t just about hitting a number in an account. It’s about replacing your income in a way that’s sustainable, tax-aware, and flexible enough to handle life’s surprises especially medical costs.

Why a written plan changes everything

A written plan forces clarity. It makes you answer the questions most people avoid:
What do I actually want retirement to look like? How much do I want to spend? What income sources will I have every month? What happens if markets drop? What happens if healthcare costs rise?

And yet, 7 out of 10 people don’t have a written plan. That’s a big deal, because a lack of planning usually doesn’t show up immediately. It shows up later as anxiety, hesitation, overspending, underspending, or constant fear of running out of money.

People delay making a plan for simple reasons: they think it’s complicated, they assume it takes too much time, or they feel like they need a perfect spreadsheet before they can start. You don’t. You just need a framework that’s real enough to guide decisions.

Your “retirement number” isn’t a guess it’s math

Most people think retirement planning starts with this question: “How much money do I need to retire?”

And the average person will tell you they need over $1 million. Sometimes they’re right. Sometimes they’re not even close. The real answer depends on your spending and your guaranteed income.

Here’s the simplest way to approach it:
Step 1: Determine how much you want to spend each year in retirement.
Step 2: Subtract the income you expect from reliable sources like Social Security or a pension.
Step 3: The remaining gap is what your portfolio needs to cover.

Once you know that shortfall, you can calculate what kind of withdrawal rate you’ll need. For many retirees in their 60s or 70s, a 4% withdrawal rate is often used as a baseline planning assumption.

That doesn’t mean 4% is a magic number. It just gives you a starting point to see if your plan is realistic or if you need to adjust your spending, timeline, or savings rate.

Budgeting: the thing everyone hates but everyone needs

Let’s be honest: budgeting has terrible branding. People hear the word and think “restriction.” But retirement budgeting isn’t about punishment. It’s about control.

One of the most common guidelines is the 50/30/20 rule:
50% of net income goes to needs
30% goes to wants
20% goes to savings or debt payoff

And if you’re serious about retirement planning especially if you’re starting later or trying to catch up—saving 20% of your net pay is an aggressive but effective target.

This is how you build margin. Margin is what keeps retirement from feeling fragile.

Risk and returns: the part that can quietly ruin your plan

A lot of retirement plans fail for one reason: people choose a strategy they can’t emotionally stick with.

Risk tolerance matters. Younger investors can usually take more risk because they have time to recover from downturns. But no matter your age, you need to understand one key truth:
Lower risk usually means lower returns.

So if someone builds a low-risk portfolio but expects high returns, the plan becomes unstable. Eventually they either panic, change strategies, or fall behind their goals.

A strong retirement plan balances:
the risk you can handle
the return you actually need
the behavior you can realistically maintain during market volatility

Because the plan you stick with beats the perfect plan you abandon.

Market downturns are where great retirement outcomes are made

Here’s something most people don’t realize until it’s too late: the worst time to stop investing is usually the time when investing matters most.

During COVID-19, nearly 50% of American savers reduced or stopped retirement contributions. That’s understandable emotionally but financially, it can be costly.

When markets drop, prices drop. That means contributions buy more shares. And over time, those shares can become the foundation of future retirement income.

The people who thrive long-term tend to do one thing consistently: they keep contributing, even when it feels uncomfortable.

Emergency savings: the buffer that protects your retirement plan

Retirement planning isn’t just about investing. It’s also about preventing unnecessary damage. And one of the biggest sources of financial damage is a lack of emergency savings.

A strong emergency fund is usually:
3 to 6 months of expenses
or even up to a full year for someone with unstable income or high uncertainty

This matters because emergencies don’t stop happening just because you’re saving for retirement. Without cash reserves, people are forced to rely on credit cards, loans, or retirement withdrawals each of which can set your plan back years.

Emergency savings isn’t exciting. But it’s what keeps your long-term plan intact.

Saving, debt, and consistency: the retirement “flywheel”

If you want a simple formula for retirement readiness, it looks like this:
Save consistently
Avoid high-interest debt
Rebalance periodically
Stay invested through volatility
Adjust the plan as life changes

Debt matters because high-interest debt creates a negative compounding effect. Saving matters because investing creates positive compounding. You want those forces working in the right direction at the same time.

Don’t ignore taxes especially when you start pulling money out

Retirement isn’t just about building wealth. It’s about using it efficiently.

When you sell investments, you may owe capital gains taxes. And those gains can be:
short-term (higher tax rates)
or long-term (typically lower rates)

Tax strategies like tax loss harvesting can help reduce taxes by offsetting gains, but this requires intentional management. Taxes aren’t something you deal with “later.” Taxes are part of the retirement plan from day one.

One important rule about retirement accounts and beneficiaries

This is a big one that confuses people: you can’t transfer your retirement account to someone else while you’re alive.

You can name beneficiaries, and those beneficiaries can inherit the account when you pass. But you can’t simply “hand over” an IRA or 401(k) to someone the way you might transfer a bank account.

If you want to give money while you’re alive, you can withdraw and gift it but taxes may apply depending on the account type and the amount.

The bottom line: retirement success is built, not hoped for

If you want to thrive in retirement, the goal isn’t just to save money. The goal is to build a system that supports your life.

A written plan gives you clarity. A budget gives you control. Emergency savings gives you stability. A smart investment strategy gives you growth. And staying consistent through volatility is what turns a plan into real freedom.

Because retirement isn’t the finish line. It’s the phase of life where the planning finally starts paying you back.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice. 

IMPORTANT DISCLOSURES: 

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor. 

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations. 

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. 

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. 

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.