Edelman: What advisors should know about purposeful retirement

As every generation reaches retirement age, this hugely transformative – and often challenging – phase of life evolves.

In 2025, retirement for many Americans is so different from how it would have been for their parents, who may have heavily focused on giving up work and enjoying some more leisure time, but would not have imagined the kind of active, purposeful retirement sought today.

Recent research from Edelman Financial Engines reveals that 39% want their retirement to by ‘adventurous’, 42% want to stay active, 26% want a minimalistic retirement, and 24% seek a nomadic lifestyle.

However, achieving these aims may be an issue with 65% feeling only somewhat confident in doing so and 35% saying their ideal retirement lifestyle feels out of reach.

InvestmentNews has been speaking with Isabel Barrow, executive director, financial planning, at Edelman, to dig deeper into how advisors can guide clients to the retirement they desire.

She says there are multiple factors driving the shift in how Americans envision retirement today including longevity, which can impact whether retirement planning even involves giving up work, which would have been the norm for previous generations.

“Retirement is no longer seen as linear and is increasingly more of a winding down over time vs. a hard stop,” she notes. “This could mean part time work, consulting work, and even changing careers after retirement and starting over. Also, there is a desire for more flexibility and the ability to create a retirement that doesn’t look like past generations. In fact, our survey found that a significant number of people say they want their retirement to look different from that of prior generations (37%).”

The changing retirement picture is fueled by the greater wealth enjoyed by retirees which empowers them to enjoy experiences, but they may also be supporting their children financially, including those adult children that live with them, which can require a rethink of plans and goals.

Retirement income planning has become more complex and Edelman’s research has identified an unmet need for more advice in this area.

“The transition from saving to spending in retirement involves a growing number of complex factors to consider, such as maximizing tax-smart strategies like the possible benefits of Roth conversions, managing a mix of accounts and different investments, timing Social Security claiming and supplementing with other streams of income, and covering health care and long-term care costs,” says Barrow.

Many retirees have misunderstandings about retirement income and how it will evolve over time, perhaps to meet a higher demand for activities early on followed by a slower pace later, with potential for health or long-term care costs. Inflation and higher insurance premiums are among the factors that should be accounted for.

“I call this the Go-Go-Go phase, the Slow-go phase, and the No-go phase of retirement! You should expect that your expenses in retirement will continuously change, as they likely have in all other phases of your life, and it’s important to understand the limitations or freedoms you have to adjust and adapt to your evolving needs,” Barrow explains.

Social Security should be a source of comfort for retirees but has become one of anxiety for many. Edelman’s survey of more than 3000 people found that 81% of respondents are worried about potential reductions in Social Security benefits, up from 73% in 2023.

In her experience of working with clients to plan their retirement, Barrow has seen some common mistakes that can jeopardize lifestyle goals.

“Common pitfalls include failing to plan for long-term care, underestimating medical costs, and not developing a tax-efficient withdrawal strategy,” she says. “Many also neglect to simulate real-life income needs before retiring, which can reveal shortfalls when it’s too late to adjust. Overlooking the impact of inflation, delaying savings, or missing out on catch-up contributions can further limit flexibility. Others continue to carry debt into retirement or hold too many accounts, making it harder to manage investments strategically.”

With future retirees ideally focusing on retirement income at least 10-15 years before their planned retirement, Barrow says important steps include maximizing contributions to retirement accounts – including super-catch up contributions for those in the 60s – reducing high-interest debt and consolidating accounts to make managing finances easier and building up cash reserves for emergencies.

In short, having a plan.

Barrow also urges employers to play an important role in retirement planning rather than simply saving.

“This includes offering automatic enrollment in retirement plans, educating workers on how to maximize contributions and catch-up options, and providing access to financial advisors,” she says. “Education around health savings accounts, Social Security, and long-term care planning can also prepare employees for the transition ahead. A more informed workforce is more likely to approach retirement

with confidence and purpose. We are seeing more employers offering financial help that extends beyond the 401(k) and includes holistic financial planning.”