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GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines<\/a> and our products and services review methodology<\/a>.<\/p>\n 20 Years Trusted by The rules on retirement\u00a0are changing.\u00a0\u202fRising living costs, shifting tax rules, longer lifespans and widening gaps in affordability are quietly rewriting what it takes to retire comfortably. Many people are relying on assumptions that no longer hold.\u00a0<\/p>\n Here\u2019s a look at the big retirement shifts taking shape,\u00a0so you understand how to make your retirement the reality that you want:<\/p>\n Location will\u00a0impact\u00a0your retirement income. The 5 Big Retirement Shifts Taking Shape in 2026<\/p>\n As a retirement expert,\u00a0I\u2019ve\u00a0observed\u00a0that more retirees are focused on creating an ideal financial portfolio without giving any thought to long-term healthcare\u00a0or what they plan to do in retirement. <\/p>\n Most are also not looking at where they live as a factor.\u00a0Paying attention to the cost-of-living is paramount since housing and living costs can eat up retirement savings. <\/p>\n It may feel\u00a0uncomfortable to think about these factors, especially if\u00a0you\u2019re\u00a0not technically retired, but\u00a0folks\u00a0should\u00a0have\u00a0these items on their\u00a0radar as they plan their retirement.\u202f\u00a0<\/p>\n Location Will Determine How Far Your Retirement Funds Will Last<\/p>\n It\u2019s\u00a0clear that where you retire matters more than when you decide to retire. Cost-of-living is a key determinant of how far your money will go.<\/p>\n According to a recent\u00a0GOBankingRates study<\/a>, it costs more than $1 million a year to live in certain cities in the U.S. For example, it costs significantly more to live in California,\u00a0Hawaii\u00a0and Massachusetts than in Oklahoma. <\/p>\n Healthcare Costs Are More Important Than Your Portfolio\u2019s Performance<\/p>\n Many of us are trained to keep track of our financial portfolios \u2014 how our stocks, individual retirement accounts<\/a> (IRAs) and 401(k)s are doing. And although\u00a0it\u2019s\u00a0important to be proactive and mindful of this, you should be aware of long-term healthcare arrangements.<\/p>\n An Employee Benefit Research Institute study estimates:<\/p>\n Up to $428,000 in healthcare savings may be needed for some couples in retirement. Lifespans are on the rise. The current numbers from the\u00a0National Health Center of Statistics\u00a0show the following averages:<\/p>\n Males: Living until 75.8 years This means that most people will have to plan for their finances to last much longer than people in\u00a0previous\u00a0decades.\u00a0<\/p>\n Increased longevity may also mean taking proactive measures to try to age well. Exercising, eating well and getting preventive healthcare tests will\u00a0help in\u00a0living\u00a0well so that you can work\u00a0for\u00a0as long as\u00a0you\u00a0desire.\u202f<\/p>\n Social Security Cannot Be Your Only Safety Net<\/p>\n Retirees cannot rely on Social Security<\/a> as their only source of income. Funds received from Social Security will cover only 30%\u00a0to 40% of retirement\u00a0expenses.\u00a0<\/p>\n When Social Security was started in 1935, the program was based on life expectancies at the time, but now the funds aren\u2019t equipped to keep up with people who are living longer and spending 25\u00a0to 35 years in retirement.\u202f\u00a0<\/p>\n The\u00a0Committee for a Responsible Federal Budget\u00a0predicts\u00a0that Social Security will be insolvent in 2032. As a result, couples will face\u00a0an\u00a0$18,400 cut in annual benefits. <\/p>\n Keep In Mind<\/p>\n The average Social Security benefit is roughly $2,000\u00a0per month, while retirees in most\u00a0states<\/a> will need $27,000 to $90,000 per year to live comfortably. <\/p>\n As a result, most retirees will need\u00a0additional\u00a0income beyond Social Security for retirement living.\u202f\u202f<\/p>\n Thinking About Purpose in Retirement<\/p>\n Retirement planning is very much centered on finances and physical health. A sense of purpose, however, is also a key factor in living longer.\u00a0<\/p>\n<\/p>\n A National Institute of Health\u00a0study found\u00a0that\u00a0having\u00a0purpose in life reduced the risk of mortality and chronic illnesses.\u00a0<\/p>\n Retirees should start thinking about how they want to spend their retirement prior to their last day of work.<\/p>\n Where Retirees Are Likely To Be Surprised Common Retirement Myths That No Longer Hold Up<\/p>\n There are some assumptions about retirement that no longer hold true:<\/p>\n Myth: You can put off estimating future healthcare costs. What Risks Are Being Underestimated<\/p>\n These are the risks retirees most often underestimate. If you ignore them, it may mean that you will face future struggles.<\/p>\n Income:\u00a0Taking too much of your retirement funds too early can quickly deplete a lifetime of savings, especially if your savings decrease because of market volatility.\u202f\u00a0 The Mistakes Retirees Are Most Likely To Make in 2026<\/p>\n Many retirees don\u2019t realize they\u2019ve made these mistakes until they\u2019re difficult or costly to reverse.<\/p>\n Overestimating Social Security Increases<\/p>\n In 2026, the\u00a0Social Security Administration\u00a0(SSA) plans to increase monthly payment amounts by 2.8% to reflect cost-of-living-adjustments.\u00a0This means retirees will receive an\u00a0additional\u00a0$56 per month. <\/p>\n Although monthly payments will go up, this nominal increase is not likely to\u00a0have\u00a0a huge impact, and retirees\u00a0shouldn\u2019t\u00a0make the mistake of overspending. <\/p>\n In addition, the boost may end up not keeping up with inflation.\u202f\u00a0<\/p>\n Underplanning\u00a0for Healthcare Costs<\/p>\n According to the\u00a0National Council on Aging,\u00a0most couples plan on $75,000 for healthcare costs, but this is a grave underestimation.\u00a0Recent retiree data from\u00a0Fidelity\u00a0shows that folks who retired in 2024 may pay up to $165,000 each on healthcare.\u00a0For a couple, the total cost is $330,000. <\/p>\n Healthcare expenses are also expected to increase over time.\u202f<\/p>\n Delaying Decisions that Require Lead Time<\/p>\n Planning for retirement means that you\u00a0can\u2019t\u00a0wing it or make decisions that\u00a0are\u00a0last-minute. Careful attention needs to be\u00a0given to\u00a0the following areas:\u202f\u00a0<\/p>\n Plan for long-term healthcare and Medicare:\u00a0Be careful of what choices you make during the enrollment period. If you enroll in a rush, your choices may be locked and result in a costly mistake early in your retirement.\u202f\u00a0 Not Meeting With a Financial Advisor To Reassess Strategy<\/p>\n The \u201cset it and forget it\u201d retirement plan is not the best recommendation to follow if\u00a0you\u2019re\u00a0trying to maximize funds in your later years.\u00a0It\u2019s\u00a0always\u00a0a good idea\u00a0to talk to a financial advisor<\/a> to see how you can further\u00a0optimize your funds. They can help with:<\/p>\n Fund withdrawal sequencing It\u2019s\u00a0ideally best to do this every year or when a life event happens.<\/p>\n Final Take on Retirement 2026<\/p>\n Being proactive about retirement now is the key to staying on top of your finances and limiting headaches in your golden years.\u202f<\/p>\n Assess where\u00a0you\u2019re\u00a0living: Price out Social Security income plus any\u00a0additional\u00a0wages you will receive. Decide if that amount will be enough for you to live comfortably \u2014 if not, it may be time to think about changing locations now to fit your future budget.\u202f\u00a0 View Sources <\/p>\n Our in-house research team and on-site financial experts work together to create content that\u2019s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates\u2019 processes and standards in our editorial policy<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"blackCAT \/ Getty Images Commitment to Our Readers GOBankingRates’ editorial team is committed to bringing you unbiased reviews…\n","protected":false},"author":2,"featured_media":419408,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,17299,147,530,14811,1666],"class_list":{"0":"post-419407","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-gobankingrates","10":"tag-personal-finance","11":"tag-personalfinance","12":"tag-planning","13":"tag-retirement"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/419407","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=419407"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/419407\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/419408"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=419407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=419407"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=419407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/cdn.gobankingrates.com\/wp-content\/uploads\/2023\/11\/icon-20.svg?webp=1&quality=75\"){kind=icon}
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Millions of Readers<\/p>\n
\nYou will need to pay attention to healthcare costs.
\nLonger lifespans\u00a0mean\u00a0you need to account for more savings.
\nYou may not be able to keep relying on\u00a0Social Security alone for income post-retirement.
\nUnderstanding your purpose in retirement\u00a0is a priority that deserves your attention.<\/p>\n
\nCouples enrolled in a Medigap plan with average premiums need about $243,000 for a 50% chance of covering medical expenses.
\nThose same couples need about $366,000 for a 90% chance of covering medical expenses.
\nIncreasing Longevity Means You May Need To Work Longer<\/p>\n
\nFemales: Living until 81.1 years<\/p>\n
\nLocation: Retirement in a low-cost vs. high-cost state can severely\u00a0impact\u00a0finances. In some cities,\u00a0the cost of living\u00a0is\u00a0more than\u00a0$1\u00a0million\u00a0annually.\u202f
\nSocial Security COLA: A 2.8% increase may not keep pace with inflation or rising Medicare Part B premiums.
\nThe \u201cretirement number\u201d myth: There is no universal savings target \u2014 the right number depends on your lifestyle, housing costs,\u00a0location\u00a0and healthcare needs.\u202f<\/p>\n
\nReality: Healthcare planning needs to start early, even if\u00a0you\u2019re currently healthy.
\nMyth: Social Security is a sufficient safety\u00a0net.\u00a0
\nReality: Even with COLA increases, Social Security alone rarely covers all retirement expenses.
\nMyth: Your spending will drop during retirement.
\nReality: Housing and healthcare costs may keep spending level, or higher.
\nMyth: You\u00a0won\u2019t\u00a0need to work past 65.
\nReality: Longer lifespans mean many retirees work part-time well into retirement.\u202f\u00a0<\/p>\n
\nHealthcare:\u00a0Putting off a healthcare plan is not only detrimental to your health, but also to your finances. Assess healthcare needs now so that\u00a0you\u2019re\u00a0not depleting\u00a0all\u00a0your retirement savings because of a healthcare crisis.\u202f\u00a0
\nLongevity:\u00a0Living longer means that you may not be able to use the 4% withdrawal rule<\/a> or assume your savings will last 20 to 30 years\u00a0of\u00a0post-retirement.
\nTaxes: Changes in taxes at the state and federal levels could make your income take a hit during retirement.\u202f\u00a0<\/p>\n
\nMap out tax strategies<\/a>:\u00a0Do not wait until the last minute to do Roth conversions or take your required minimum distributions (RMDs), as well as do capital gains planning. This could create a huge tax burden that may undermine your retirement savings.\u202f\u00a0
\nBe proactive with estate and will and trust planning:\u00a0Many people\u00a0fail to\u00a0consider updating wills and beneficiaries and planning charitable contributions. When the proper updates are not made, this can lead to family conflict and funds held up in the probate process.\u202f\u00a0<\/p>\n
\nTax exposure
\nLongevity stress-tests
\nIdentify healthcare\u00a0risks
\nAlign investments with goals<\/p>\n
\nFactor in longevity: Plan for a longer retirement, instead of just a mere 10\u00a0to 15 years. Shift your focus so that you reassess numbers that reflect living longer,\u00a0possibly 30\u00a0to 35 years.\u202f\u00a0
\nMake a healthcare plan now: Consider putting funds in your health savings account<\/a> (HSA), compare cost differences between Medicare plans and line up options\u00a0regarding\u00a0long-term\u00a0healthcare. This could include\u00a0private insurance plans and self-funded plans.\u202f\u00a0
\nVisit a financial advisor regularly: You want to reassess periodically to see if your retirement goals align with your\u00a0plan. You\u00a0should revisit plans with a financial advisor twice a year or if a major life change occurs.\u202f\u00a0<\/p>\n