How to Prepare for Retirement: What Successful Retirees Do Differently in the Transition Years

By Jeffrey Meenes, CFP®

I've seen retirees with $3 million worry constantly—and retirees with $1.2 million sleep peacefully.

The difference is rarely the size of the portfolio. It's how they prepared for retirement—particularly the critical five to ten transition years before and after leaving the workforce.

We've all heard the conventional wisdom: "hold a globally diversified portfolio," "stick with a 60/40 stock-and-bond allocation," "follow the 4% withdrawal rule," and "buy and hold for the long term." This is sound advice—and for many people, it's a solid starting point. But what separates the retirees who merely survive their transition from those who truly thrive?

After many years of guiding clients through retirement, I've noticed clear patterns among those who come out the other side feeling confident, financially secure, and genuinely excited about this chapter of life. Think of it as the difference between surviving retirement and truly thriving in it.

They Respect the Transition Years—But Don't Fear Them

Why Sequence-of-Returns Risk Matters

The five to ten years surrounding your retirement date—what financial planners call the "transition zone," or what I like to call the "danger zone"—carry real weight. The sequence of investment returns during this window can meaningfully affect how much income your portfolio sustains for decades to come. A sharp downturn early in retirement can be far more damaging than the same downturn ten years later.

But here's what successful retirees understand that anxious ones often miss: this period carries just as much upside potential as downside risk. Strong market returns during these years can accelerate your wealth beyond original projections. The most successful retirees don't ignore sequence-of-returns risk—they plan for it proactively and position themselves to benefit when markets cooperate.

They Understand the Math of Recovery—and Use It to Their Advantage

One reason successful retirees plan ahead is they understand a fundamental truth about investing: recovering from losses requires disproportionately larger gains. A 10% loss needs roughly an 11% return to break even. A 25% loss requires a 33% gain. A 50% loss requires 100% just to get back to where you started.

Rather than finding this paralyzing, the best-prepared retirees treat it as motivation. They gradually shift their portfolio allocation as retirement approaches—not out of fear, but with intention. They know the earlier years of their career are the time for aggressive growth, and the transition years call for a more thoughtful balance of growth and protection.

It's not about retreating from the market. It's about right-sizing your risk so a temporary or sustained downturn doesn't derail a plan that's many years in the making.

They Build a Multi-Year Financial Buffer

One of the most consistent habits I see among confident retirees is maintaining a dedicated buffer—held in cash equivalents and lower-risk holdings earmarked for living expenses. This isn't money sitting idle—it's a strategic reserve that serves one critical purpose: preventing forced selling of growth investments during a downturn.

Here's a real example.

Retiring Into a Down Market: A Real-World Example

One client entered retirement in early 2020—just before markets declined sharply. Because we had structured a multi-year income reserve, we didn't need to touch equity holdings during the downturn. In fact, we did the opposite—rebalancing the portfolio and buying into the decline. Withdrawals continued uninterrupted, and by the time markets recovered, the long-term strategy remained on track—allowing the client to continue pursuing their retirement goals with confidence.

The buffer didn't eliminate volatility. It eliminated reaction. That distinction is powerful.

With a buffer in place, a down market becomes a non-event rather than a retirement-altering moment—or perhaps even an opportunity. Not market timing—just recognizing when a disciplined rebalance lets you add to your portfolio while prices are low.

They Stay Engaged—and Revisit the Plan Regularly

The retirees who fare best don't set a plan in their 50s or 60s and hope it holds up. They revisit it—frequently—especially in the decade leading up to and following retirement. Markets change, tax laws evolve, personal circumstances shift. The plan needs to keep pace.

This isn't about obsessing over daily market moves. It's about maintaining a living, breathing strategy that adjusts to new information. Successful retirees see their financial plan the way a pilot views a flight plan: the destination doesn't change, but course corrections along the way are expected and welcome.

Key Areas to Reassess Before and After Retirement

They adjust withdrawal strategies in down markets. They revisit Roth conversion windows. They plan ahead for required minimum distributions so RMDs don't create unnecessary tax surprises—or push them into a higher bracket at the worst time. They re-evaluate Social Security timing as circumstances evolve.

They Lean on Qualified Guidance

Perhaps the most common thread among retirees who feel great about their financial lives is this: they didn't try to figure it all out alone. Nearly every smooth retirement transition I've witnessed shares one common element—there was a written, goals-based financial plan and tax optimization strategy in place before retirement began. Not guesswork. Not rules of thumb. A framework.

A good advisor doesn't just manage a portfolio. They help you see opportunities you'd otherwise miss: tax-efficient withdrawal strategies, Roth conversion windows, Social Security timing, and ways to structure income that maximize both longevity and flexibility. They stress-test the plan under adverse scenarios and keep emotions from driving irreversible decisions.

Confidence rarely comes from returns alone. It comes from structure.

The Opportunity in Uncertainty

It's easy to look at today's headlines and feel uncertain about the future. But uncertainty is a permanent fixture of financial markets—it's not new, and it's not going away. What is within your control is how well you prepare for it.

The retirees who thrive aren't the ones who waited for perfect conditions. They're the ones who built a plan sturdy enough to handle imperfect ones—and flexible enough to capitalize when conditions turn favorable.

If you're within a decade of retirement, now is the time to get intentional. Not reactive. Not fearful. Intentional.

Frequently Asked Questions

What is sequence-of-returns risk and why does it matter in retirement? Sequence-of-returns risk refers to the danger that poor market performance early in retirement—when you're beginning to take withdrawals—can permanently reduce the longevity of your portfolio, even if average returns over time are reasonable. A retiree withdrawing from a declining portfolio locks in losses that the portfolio may never fully recover from, which is why the years surrounding retirement carry so much financial weight.

How much should I have in cash or low-risk investments before I retire? There's no single number that works for everyone, but the goal is to have enough in cash equivalents and lower-risk holdings to cover your planned withdrawals for multiple years. The right amount depends on your spending, income sources, and overall portfolio strategy—which is why building this out with a financial advisor is so valuable.

How often should I update my retirement plan? At a minimum, you should revisit your plan annually—but more frequently during the transition years leading up to and immediately following retirement. Key areas to reassess include your withdrawal strategy, Roth conversion opportunities, required minimum distribution planning, and Social Security timing. A financial plan should be a living document, not something you set once and forget.

Are you interested in learning how we help clients build confidence heading into retirement? We encourage you to visit our website and learn about our comprehensive wealth management services. If Meenes Wealth Partners sounds like a good fit, schedule a complimentary Get Acquainted meeting to discuss the possibility of working together.