Can’t buy me love, the Beatles song goes, but what about a happy retirement?

It’s been more than 20 years since the writer Dan Buettner helped popularize the idea of Blue Zones, areas of the world where daily physical movement, healthy diet and regular social engagement create excess longevity. Scientists have since questioned the underlying research, suggesting shoddy data is the real explanation behind Blue Zones. What’s not in doubt is that a happy and healthy retirement requires more than money, and advisors should help clients find meaning in their golden years.

“You can question the numbers behind the Blue Zone concept,” Jon Sabes, author and founder of Longevity Financial Partners, told Retirement Upside. “What you can’t deny is the link between lifestyle, healthy habits and well-being. Happiness in retirement is not just about how much money you have but how you’ve created a sense of meaning.”

The 3 Ts of Meaning

The “3 Ts of meaning” in retirement, namely time, talent and treasure, have become a popular mantra in retirement planning and David Blanchett, head of retirement research at Prudential Financial, believes that intentionally building a sense of purpose in retirement is paramount.

“Americans associate their identity with their jobs and when you’re no longer working, you can lose that,” Blanchett told Retirement Upside. “The idea behind the 3 Ts is thinking about how you can redeploy your time, treasure and talent to intentionally create this sense of purpose. The key here is that these 3 Ts cover a variety of ways people can have an impact.”

For example, a given client may not have excess savings beyond what they need to live (i.e., they are low on treasure), and for whatever reason, they may not have specific talents that could be useful for the social issues they’re concerned about. Maybe, though, they have lots of time to offer in service to a well-defined cause or organization. “You can use this resource to have a positive impact,” Blanchett said. “Being very intentional about this idea of mattering is an important part of achieving a truly successful retirement. Now, that’s not to suggest Americans couldn’t save more for retirement, but I’m not convinced finances are the biggest concern.” Case in point, from Blanchett’s research on the topic:

• Self-reported financial well-being declines for only about 7% of households moving into retirement, despite consumption declining by about 20% on average.
• 84% of those age 80 or older spending just $20,000 to $30,000 annually are satisfied with their situation.

Put Me In, Coach! Sarah Mouser, managing director of financial planning at Verdence Capital Advisors, encouraged planners to factor the “mattering challenge” into their work. She’s even heard of some firms tapping life coaches and career consultants to help clients make a smoother emotional transition to retirement. “It’s not for everyone, but life coaching can be so beneficial,” Mouser said. “People will literally delay retirement unnecessarily because it’s scary to think about that loss of routine and meaning. This has to be part of the plan.”

Saving for retirement is hard, and many Americans are struggling.

More employees are turning to their 401(k)s to pay necessary expenses despite the tax losses, according to a recent Vanguard report. The percentage of 401(k) participants who took money out has ticked up by about 1% since 2021, with the figure hitting 6% last year. So-called “hardship withdrawals” can be financially disastrous, since they sap important retirement savings, not to mention undermining the tax benefits of employer-sponsored retirement plans. The trend is something advisors should understand to better prepare both current clients and the general public, said Fred Barstein, CEO of The Retirement Advisor University.

“I don’t think there’s any real magic, like something happened,” he said. “The market went up, but that doesn’t help you to buy food, or pay your rent or your mortgage.”

Hard Times

One reason Americans are taking money out of retirement funds is that federal rules preventing them from doing so have relaxed, such as one law, eliminated in 2018, that used to require people to take out a 401(k) loan first. But the primary factor is the rising cost of living, Barstein said, with the price of necessities like housing and healthcare more expensive than ever. “I think it’s really just a function of rising costs, the cost of living: gas prices, food prices, pretty much everything,” he said.

According to the Vanguard report:

• The most common hardship withdrawal scenario is a worker making less than $50,000 who is unable to meet their monthly housing bills.
• Housing accounted for 40% of withdrawals for those making less than $50,000.
• Those in the highest income bracket, who made $150,000 or more, accounted for just 1% of the hardship withdrawals and were most likely to use that money for tuition payments.

Education can help in the near term, Barstein added. “The advisor should be more available, and they should do more education,” he said. “What I would be doing is on-demand webinars. Do a 12-minute video on, ‘Hey, if you’re having trouble and you’re thinking of doing a hardship, I understand. Here are some other options.’”

PLESA and Thank You. One underappreciated financial instrument is the PLESA, or pension-linked emergency savings account, Barstein said. PLESAs are short-term savings accounts that let workers who aren’t highly compensated make Roth, or after-tax, contributions. “Those should be funded first before people put money in their 401(k),” he said. “It’s sort of a sidecar, and when people are told to do this, and it’s part of the payroll, and it comes out of the payroll, they’re more likely to do it than if they’re doing it on their own.”

What goes up must come down.

After years of aggressive expansion, many Medicare Advantage plans are trimming or recalibrating popular extras like dental, vision and over-the-counter allowances. The reason is tighter reimbursement rates, rising healthcare utilization and mounting margin pressure, said Cristin Hopkin Bishop, chief operating officer at The Brokerage, whose field marketing organization works with major insurance carriers across the US. These forces are fundamentally changing how Medicare Advantage plans are structured and priced, meaning financial advisors working with retirees should take note.

“The current environment is forcing plans to rebalance benefits,” Hopkin Bishop told Retirement Upside. “Are higher out-of-pocket costs inevitable? Not necessarily across the board, but some level of cost-sharing adjustment is likely going to happen.”

A Balancing Act

Traditional Medicare requires beneficiaries to piece together multiple products, including Part A, Part B, a Part D drug plan, and often a Medigap policy. Medicare Advantage combines those elements into a single plan, which is easier for many beneficiaries to understand and manage. Further, traditional Medicare does not have an annual out-of-pocket maximum. Medicare Advantage plans do, which gives retirees a clearer ceiling on what they could spend in a year.

With tighter margins, carriers are also concentrating on markets where they can operate sustainably and deliver strong provider networks. In some cases, they’re exiting counties where the economics or provider dynamics no longer make sense. Plans have several levers they can pull before raising member costs, including:

• Adjusting supplemental benefit levels.
• Refining provider networks.
• Modifying prior authorization or care management programs.
• Redesigning copay structures rather than premiums.

“Bottom line, the Medicare Advantage market is maturing,” Hopkin Bishop said. “The last decade was largely about expansion and benefit growth. The challenge for carriers now is maintaining that value while adapting to a more constrained economic environment.”

Why Medicare Advantage Expanded So Aggressively. Medicare Advantage plans are also allowed to offer expanded benefits such as dental, vision, hearing, transportation, fitness programs, additional food or grocery shopping cards, and some in-home support services, which has been a boon for the programs.

“These benefits address real quality-of-life needs for seniors,” Hopkin Bishop said. “At the same time, traditional Medicare remains an important choice for individuals who prioritize broad provider flexibility and fewer network constraints. Both pathways serve important roles within the Medicare system, and the growth of Medicare Advantage largely reflects consumer preference for simplicity and added benefits in managing healthcare during retirement.”