What typically happens to a person's financial situation upon retirement?

Upon retirement, a person's financial situation typically sees a decrease in income. This is primarily because many individuals transition from a steady paycheck derived from employment to relying on savings, pensions, Social Security, or other forms of fixed income that often do not match their pre-retirement earnings. In many cases, the disparity between work income and retirement income can lead to a lower overall financial standing.

As individuals leave the workforce, they also stop contributing to retirement funds, which can further impact their financial resources. Moreover, expenses may change upon retirement, but the income from employment usually is no longer available, leading to a general decline in financial means. This situation highlights the importance of robust financial planning prior to retirement to ensure adequate support during this phase of life.