Retirement Planning: Getting Started Checklist

Retirement Planning: Getting Started Checklist
May 3, 2015 Pat Berg

Retirement planning is, by far, the biggest planning challenge most of us will face in our lives. Because it’s not just about saving money, it’s about preserving a lifestyle. And it’s multi-faceted-with insurance and legacy planning as a big part of the process.

Because we understand how overwhelming the prospect of retirement planning can be, we’ve created the following eight-step Getting Started checklist to help reduce anxiety and make the process much more approachable.

• Step 1: Start (or continue) saving. You can’t have a reliable retirement plan without having money saved. The first step is maxing out any employer-sponsored plans with an employer match. This is a great way to increase your savings without impacting your budget. Next, you should consider opening your own individual retirement account to further grow your savings.

• Step 2: Dig out of debt. It’s never a good idea to carry debt into retirement. So having a debt repayment plan while you’re working is just as important as having a savings plan. Pay as much as you can over your minimum payments each month and use debt carefully-only adding debt when it’s truly necessary and worthwhile.

• Step 3: Consider taxes. Retirement planning isn’t just about saving; it’s also about your future spending. While your tax rate will generally be lower upon retirement, it can still take a bite out of your taxable income, which would include distributions from various retirement accounts. However, it’s still important to consider the tax savings you get now when you contribute to these accounts, as that reduces your overall tax burden and can give you more money to save.

• Step 4: Start learning about Social Security. Social Security isn’t as straightforward as you may think. There are ways that you and your spouse can increase your payments through various strategies such as restricted application and delaying payments until well after you reach full retirement age. It’s important to understand all of these options and the benefits they bring so you can adjust your plans accordingly.

• Step 5: Think about your lifestyle. The whole purpose of retirement planning is to make sure you can financially support the kind of lifestyle you want to live once you stop working. In order to decide how much you need to save and what kind of income you need at retirement, you should consider the kind of lifestyle you want later and think about how it differs from your lifestyle today. This will allow you to realize the things you need to do now in order to ensure that ideal lifestyle later.

• Step 6: Make a plan for post-retirement income. Focusing only on saving money without any plan as to how you’ll get a regular, guaranteed income is a mistake. Social Security offers one limited form of income after retirement, but products like annuities can supplement that with an additional income that you can’t outlive. Not only will this help moderate your spending and preserve your principal savings, it will help you sleep better at night.

• Step 7: Insure yourself. It’s important to have insurance during retirement. Insurance will help you protect the value of your property, provide a legacy to your heirs and ensure that you have resources to pay for non-medical, long-term care (LTC) needs such as help with bathing and eating. LTC insurance is especially important because Medicare doesn’t cover the cost of this care.

• Step 8: Get healthy. Don’t underestimate the power that good health will have in terms of happiness and savings during your post-retirement years. With increased mobility, better balance, healthy weight and fewer medications, you won’t just be able to enjoy yourself more; you’ll likely have less medical expenses.

Don’t allow the prospect of retirement planning to overwhelm you. Start taking these steps today in order to brighten the prospects of your future retirement and create lasting financial security during your golden years. Be sure to contact your financial advisor to help you get started with your retirement planning.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or products may be appropriate for you, consult with your financial advisor.

The Retirement Pros
May 2015

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