Retirement Planning: Simple Checklist To Get Started
Retirement planning becomes more manageable when an uncertain future is turned into a series of specific decisions. Begin with the lifestyle you want, estimate future expenses, and create a savings and investing strategy that can adapt over time.
Start With Your Numbers
Review current monthly spending, plan for larger expenses on the house, vehicle, and healthcare, determine your expected retirement income, estimate monthly healthcare costs, debt, and the age at which you hope to stop working. Include inflation into your numbers as the price of goods and services continues to rise. Make sure you know how much you have saved across your investments and other assets to forecast how long they can last. Finally, build a reasonable emergency reserve so your long-term investments are not disrupted by short-term surprises.
Use the Right Accounts
Employer plans, IRAs, and taxable accounts each have different tax features and withdrawal rules. Contributions should be coordinated with your overall tax situation and investment timeline. What is doubly important is understanding which bucket to withdrawal from first and for how much. You must consider the taxable gains, taxable income, and more when it comes to withdrawals and selling assets to produce the necessary funds for your retirement lifestyle.
Investment Allocations
It's critical to understand how your investments are currently allocated and how that may need to change as you enter retirement. What are the specific goals you are hoping to accomplish with your investments? Are you seeking monthly income? Do you want to have access to the funds quickly? Do you want guarantees? What about growth? These are all questions that must be answered in coordination with all your investment assets to ensure the plan will work long term.
Worst Case Scenarios
Unfortunately life isn't all sunshine and rainbows as we all can relate to. It is critical to consider some of the what ifs and plan ahead. Having proper life insurance in place to protect income, and debts is important. Also having a solid understanding of the health insurance needed once you leave your job will have a major impact. Lastly is considering your estate and passing down your wealth to your spouse of family. Making sure documents and strategies are in place BEFORE an unfortunate event happens is always ideal.
Review Annually
A retirement plan should change as your income, family circumstances, market conditions, and priorities change. An annual review can help keep savings rates, investment risk, insurance, and beneficiary choices aligned with your goals. The only thing we can all predict is life will in fact change. It's important that the plan changes with your life!
**Investing involves risk, including the possible loss of principal and fluctuation in value
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