Key Financial Challenges in Your First Decade of Retirement

Mastering Money: Key Financial Challenges in Your First Decade of Retirement

By Rob Johnson

Retiring is like setting off on a whole new adventure. You say goodbye to the familiar routine of a steady paycheck and structured days, venturing into a world of limited resources and boundless free time. It’s quite a departure from what you’ve known all your life. Now is the moment to see if all your hard work will truly pay off.

In our experience, we’ve noticed that many retirees experience the same five financial planning challenges during the first decade of retirement. Curious to learn more? Let’s dive in.

Not Creating a Withdrawal Strategy

Financial planning doesn’t stop once you enter retirement. Capitalize on your wealth by deciding the most tax-efficient way to withdraw funds in your golden years. 

Different financial accounts are taxed at different rates. Traditional IRAs and 401(k)s are taxed at the ordinary income tax rate when you withdraw. Roth IRAs and Roth 401(k)s are taxed beforehand, so the money is withdrawn tax-free**. Funds in a taxable investment account are taxed at the capital gains tax rate, which is different from your ordinary income tax rate. 

As you can see, calculating the best time to pull from each account is enough to give anyone a headache. But the last thing you want is to get hit with a hefty tax bill.

Create a withdrawal strategy with the help of a trusted professional who can help ensure you’re withdrawing funds at a sustainable rate and that you’re doing it in a tax-efficient way.

**Disclosure: To qualify for the tax-free and penalty-free withdrawal or earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 ½. Other exceptions may apply; consult www.irs.gov or your tax advisor for your specific situation.

Overspending in Retirement

Many people spend their retirement years doing all the things they never got to do when they were working—starting a passion project, remodeling the house, traveling the world, and more.

It’s easy to underestimate the amount of money you’ll spend those first few years when you don’t account for all these “extras.” Overspending, even for a short period, can shave years off the longevity of your assets. My advice? Create a spending plan. Calculate your monthly income given your withdrawal strategy (See #1) and then create a budget. 

Ignoring Inflation

Another major challenge we see new retirees face is the desire to play it safe in the stock market. This could potentially do more harm than good as it may lead to inflation risk. 

While healthcare expenditures are typically affected less by inflation than other spending categories, from 2021-2022 there was a 4.0% increase in medical care services (1) compared to the historical average inflation rate of 1.23%. (2) What does this mean? Retirees are more likely to feel the effects of inflation due to mandatory expenses, such as healthcare costs. 

As tempting as it may be, resist the urge to worry about short-term stock market volatility. With a retirement that could easily last 20 to 30 years, inflation is still one of the biggest threats to your nest egg. Sit down with a trusted professional who can help you plan ahead to offset inflation. 

Not Having an Emergency Fund

Could you comfortably pay an unexpected, major expense in retirement without jeopardizing your financial future? For most of us, the answer is no. Just as you were taught to have an emergency fund in your formative years, it’s even more critical to have one in your retirement years. 

It used to be recommended to have 3 to 6 months of expenses saved up in an easily accessible savings account, but now more professionals are recommending at least 12 to 18 months’ worth. (3) This may sound like a lot, but an emergency fund serves two purposes: it covers unexpected expenses and it helps provide stability during economic downturns. This means you can optimize your portfolio in an effort to beat inflation (#3 on our list) while having a safety net to fall back on. 

Navigating Retirement On Your Own

After years of carefully building and safeguarding your wealth, don’t leave your retirement finances to chance by managing them alone. Partnering with a trusted financial advisor can help make a difference between depleting your retirement fund prematurely and creating a strategy designed to last a lifetime.

Why wait? Schedule an introductory meeting today by reaching out to us at rmjohnson@frontierasset.com or 307.461.5550. 

About Rob

Rob Johnson is a financial advisor at Elevate Wealth Management, an independent, fee-only wealth management firm serving young professionals, pre-retirees, and retirees in Sheridan, Wyoming, and surrounding areas.

With a passion for helping others achieve their goals, Rob is committed to working closely with clients to help empower them to make the best financial decisions for their lives. Rob understands that every person faces unique circumstances when it comes to their financial future, so he will tailor his approach and recommendations to help ensure clients feel confident about the direction they’re headed. Rob has an enthusiasm for customer service, which is apparent during every client interaction he has. Honesty and integrity are at the center of the advice and recommendations he gives, and he will work hard to build and maintain trust in every relationship.

Rob has a bachelor’s degree in economics and finance from Black Hills State University and is actively working towards his Certified Financial Planner (CFP®) designation. He is a Wyoming native who grew up at the foot of the Big Horn Mountains in beautiful Dayton, Wyoming. He believes strongly in giving back to the community that helped raise him by volunteering his time and serving as an active board member with various non-profit organizations in the area.

Rob and his wife Emma have two sons, Michael and Sammy, who are the lights of their lives. Rob has a passion for sports and is an avid golfer. During the warmer months of the year, there’s a good chance you’ll find him on the first tee. To learn more about Rob, connect with him on LinkedIn.

The views expressed represent the opinion of Frontier Asset Management. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Frontier Asset Management believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. The use of such sources does not constitute an endorsement. Frontier does not have an affiliation with any author, company or security noted within. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and the Frontier Asset Management’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in securities involves risks, including the potential loss of principal. Past performance is not indicative of future results.

Frontier does not provide tax advice. Please consult with a CPA for recommendations pertaining to individual circumstances.

To qualify for the tax-free and penalty-free withdrawal or earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 ½ . Other exceptions may apply; consult www.irs.gov or your tax advisor for your specific situation. 

Elevate is the financial planning division of Frontier Asset Management. Frontier Asset Management is a Registered Investment Adviser. The firm’s ADV Brochure and Form CRS are available at no charge by request at info@frontierasset.com or 307.673.5675 and are available on our website www.frontierasset.com. They include important disclosures and should be read carefully.



(1)  Investopedia, “How Inflations Impacts Your Retirement Income,” February 18, 2024

(2) Zippia, “What Is the Average Inflation Rate Each Year,” June 28, 2022 

(3)  MarketWatch, Inc. “Suze Orman now says you need this much in emergency savings (and psst: you’re probably not going to like it),” September 10, 2022