For some, like Roger Rea, a retired teacher living in Omaha, Neb., the transition into retirement is financially seamless. “My retirement income comes from our retirement system as well as Social Security,” Rea says. “In addition, I have quite a bit of money invested in my 403(b) account, which I have not had to tap, yet. I will start withdrawing from that account when I turn 70 and a half.”

Rea, 69, taught chemistry at Omaha Northwest High, until 2000. He is confident that his comfortable retirement will continue due to his long involvement in financial matters. He also puts his knowledge to work as chairman of the board of NEA’s credit union—a $90 million operation, and has served as trustee of the Association’s teacher retirement plan for more than 20 years.

Rea’s retirement has been worry-free. But adjusting to a new financial reality is challenging for many seniors. As the old adage says, money can’t bring happiness. But lack of it can bring misery when peak earning years have gone.

“When you think about a teacher who retires at 62 after teaching for 40 years, they are likely to have a better life expectancy than the average person because they would have had access to quality medical care and that is likely to continue,” says Ray Ferrara, president/CEO of ProVise Management Group, and a financial planner in Clear Water, Fla. “If they kept themselves in good shape that adds to life expectancy.”

For a financially successful retirement, learn to navigate the worlds of Social Security, Medicare, pensions, 403(b) tax-sheltered annuities, and more.

How Much Will You Need?

Experts say retirees need at least 80 percent of their pre-retirement earnings to live comfortably. Instead of focusing on the amount of money they made while working, Ferrara advises retirees to consider the cash flow they needed while working. It’s that number, he says, that helps manage financial resources.

“Take someone who is making $50,000 of salary. They don’t need to replace the full $50,000 because they’re paying 7.5 percent to Social Security. So they’re really living on $46,250,” Ferrara says. “They were also contributing $400 a month to their 403(b) plan while working. That’s another $4,800. So they were really living on cash flow of $41,450.” Ferrara advises clients to replace at least 100 percent of their pre-retirement cash flow needs.

He also says that restraining the impulse to spend may be difficult during early retirement because new retirees often underestimate how much of their money will go toward having fun during the first couple years of their new lives. “All of a sudden they have this newfound freedom so they’re going to take advantage of it.”

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By Gary Rawlins