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7 essential components for your retirement checklist

Making a ChecklistCreating and reviewing a retirement checklist can help ensure your savings and investments stay on track! Whether you’re nearing retirement or have many years to go, here are some helpful tips.

Determine your retirement income needs

Take time to review what you spend now. As monthly expenses can vary significantly from month to month, many people can’t answer this question easily. But it’s a good exercise to get an idea of your average expenses over several months, up to at least one year. Be certain to include annual expenses like insurance, property taxes, and so on when making the calculation. If you’re closer to retirement it will be a bit easier to get a handle on your retirement needs. For younger workers, it can be difficult to determine how much income will be needed to cover expenses in retirement, but it’s worth it to come up with an estimate for use in planning.

Set realistic retirement planning goals

It’s important to set goals early on in your retirement planning process — but be prepared to revisit them more often as you get closer to retirement. Also, retirement needs are often miscalculated. For example, while some expenses during retirement decrease — others will increase! Work with your financial advisor — they can help you set your goals as realistic as possible, and their experience can give you insight into your goal setting.

Scientific CalculatorBe aware of specifics such as inflation, asset allocation, and time

Factoring for inflation in any financial plan is essential, including your retirement. I use the term “individual inflation” when talking to my clients and figure in using more than the CPI (consumer price index). Your stage in life has a great deal to do with the individual inflation rate. For example: As we age, health care often accounts for more of our expenses. While the CPI may be 2%, the cost of health care might rise at a much faster rate.

It’s also important to consider how your assets are allocated. You want your investments to be able to provide income at an increasing rate to account for the higher cost of living. With 2% inflation, a $75,000 annual income at age 65 will need to be over $111,000 by age 85, in order to provide the same lifestyle. Being too conservative or too aggressive each presents risks of their own as well.

Think seriously about how long you will spend in retirement

Don’t forget you may spend many years in retirement. It’s not uncommon for people to spend almost as many years in retirement as they spent working! This is extremely important in setting realistic goals and determining how much you really need in your plan, yet it’s often overlooked.

Maximize your retirement savings options

Even if you’re only a few years from retirement, it can be very helpful to maximize retirement savings options. Review your 401k, 403b, IRA, Roth IRA, and so on with your financial advisor.

Even if you are making the maximum contribution you may be able to contribute additional funds to your 401k plan, some plans allow after tax contributions also. This can give you the option of expanding your Roth IRA later. In turn, this can help with tax efficient planning in retirement.

A good general retirement savings guideline for younger workers: if you’re in your 20’s, make it a goal to save 10% of your salary. By age 30, try to get to 15%.

Working TogetherSet up a regular review of your retirement plan

Even if you’re already in retirement, a regular review is necessary. Those between 59½ and 70 should be fully informed about IRA distributions, including those that are required. Careful planning here can help greatly with efficient tax planning.

Don’t forget about your liabilities

One last thing — we talked about your asset allocation, but don’t forget about your liabilities. Be sure you are using credit efficiently. With the rise in real estate values, financial institutions are strongly suggesting that investors like you use the equity in your home for other things. I’m not saying there is never a reason to use the equity in your home – but your home is not an ATM, and liabilities can hold you back from your retirement goals.

July 2019


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Investing involves risk including loss of principal.

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