Retirement Guidelines

Guidelines Within Each Decision Zone

NEFE's Think Tank experts developed the following messages for eight decision zones:


  • If you are healthy, don’t stop working until you prove you can afford to.
  • Aim to work at least until your full retirement age (66 to 67). It produces many benefits, including:
    • Prolonging any health-care coverage you may have
    • Building your retirement assets
    • Increasing your ability to reduce your debt
  • If you are considering phased retirement, know what impact scaling back will have on your retirement income, health-care coverage, job security, and other life situations.
  • Part-time work is a good way to supplement your retirement income. 

Social Security

  • Deciding when to begin taking Social Security benefits is one of the key decisions that determines if you will have enough money for your retirement years. If you are near retirement age, it is not wise to make decisions about how you should pay for retirement based on fear that the U.S. Government can’t afford Social Security payments.
  • The earlier you take your Social Security benefits, the less monthly income you will receive during your retirement years. If at all possible, do not begin taking Social Security until you are at least your full retirement age (66 to 67). If you take Social Security benefits at age 62, your benefit will be approximately 25 to 30 percent less (depending on your age) than if you had waited until your full retirement age.
  • Claiming Social Security at age 70 produces a monthly payment that is at least 75 percent higher than if you started taking benefits at 62.
  • If you wait to receive benefits until after your full retirement age, your monthly benefit continues to increase until you reach age 70. If you delay receiving benefits until age 70, you’ll get 32 percent more monthly benefit than you would at full retirement age (66 to 67). 

The House

  • A house may be your biggest asset, but be careful about viewing the value of your house as if it were your retirement plan. Housing prices fluctuate. You need other forms of savings.
  • If at all possible, plan to pay off your mortgage before you retire.
  • Reverse mortgages may be useful in some situations, but make sure to thoroughly investigate all charges, fees, and other options. The amount you will be able to borrow is usually based on a number of factors including age, equity in your house, and the prevailing interest rate.
  • Plan so that you do not need to use home equity. However, if it’s necessary, the way you use your home equity to help pay for your retirement years should not be an emotional decision, but one based on research and your personal needs. As in all complex financial matters, get advice from a qualified financial planner about your best options.

Insurance Products

  • Use your employer-provided health-care coverage as long as possible. Then, after age 65, purchase Medicare Parts B and D. Part B covers most doctor, hospital, and related expenses. Part D provides a prescription drug benefit.
  • Understand that Medicare is not a free pass; in fact, it may only pay about half of your health-care expenses. Still plan to save for out-of-pocket expenses and premiums--some say as much as $225,000.
  • Examine long-term health-care insurance options carefully to make the right choice for you. It is wise to get unbiased professional advice about all of your options.
  • Insurance companies sell many forms of annuities (financial products that provide a guaranteed monthly income for your lifetime). Study them carefully. It may be a good idea to have some portion of your savings in an immediate fixed annuity, but they come with different costs, benefits, and provisions. Study and compare these products carefully. If you buy an annuity, get one at a reasonable cost that is adjusted for inflation.
  • Don’t purchase insurance or investment products unless you understand how they work.
  • Most retired Americans do not need life insurance, except perhaps to cover burial expenses.

Defined Benefit Pensions

  • Your employer pension is an annuity that gives you a steady “paycheck” for your retirement. Be sure you understand the terms of accepting early retirement incentives and lump-sum payouts in lieu of the annuity.
  • If you take a lump-sum pension payment from your employer, you are likely to be tempted to spend it more rapidly than you should. Instead, invest it carefully.
  • To protect yourself from inflation, save some of your pension benefits to ensure you have enough money for your advanced elderly years.

Defined Contribution Plan

  • In most cases, you should not “cash out” your retirement 401(k) savings to receive a lump sum before age 59½. This always will cost you money, and there are far better ways to pay yourself through all of your retirement years, including using a rollover or keeping money in your company plan.
  • Always consider how much risk you can tolerate in making your investments.
  • Even at retirement, most people still need to invest to create diversified assets that may need to last for decades. This also will help you weather market turmoil.
  • Consider investing part of your retirement savings in a fixed annuity that gives you a steady “paycheck” for your entire retirement. Be aware that in general, annuities can be complex financial products.
  • Get good advice about how best to invest your assets to fit your personal situation.
  • When you retire, have a portion of your assets still invested in stock funds to capture growth opportunities and protect against inflation.
  • The amount you withdraw for living expenses is critical. Don’t withdraw too much. Aim to have enough money for at least 30 years of retirement. Don’t withdraw more than 4 percent of your savings in the first year. To calculate withdrawal amounts every subsequent year, multiply the percent you withdrew the first year by 1.03. In an economic downturn, consider using a lower withdrawal rate.
  • As a precaution, set aside at least a year’s worth of living expenses to protect against having to sell investments at low values to raise cash.


  • Do not enter your retirement years with credit card or other consumer debt.
  • If possible, pay off your entire mortgage by retirement.
  • Do not take on new debt prior to or during retirement without a realistic plan to pay it off.
  • Consider the 10 years before retirement as your “debt-reduction decade.”


  • Older Americans—even those who are financially literate and experienced with investing—are highly targeted by scammers, con artists, misleading advertising, and fraud, so be especially on guard.
  • Recognize that most fraud is committed by people whom the victims know—friends, neighbors, fellow members of social and religious institutions, and people they’ve done business with before.
  • Never give in to pressure tactics. Make no major money decisions quickly, and never without getting a second or third opinion from people you trust.
  • Investigate every financial decision thoroughly. If you suspect you may be targeted for fraud, immediately contact authorities.
  • Remember that if something sounds too good to be true, it almost always is.
  • Help elder family members and friends to ensure that they are not taken by fraud, suspicious relationships, or other manipulative attempts to get money from them.