10 Critical Considerations For Retirement Planning Checklist

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As a practicing CERTIFIED FINANCIAL PLANNER^® for over 30 years, I find the number one mistake people make in planning for retirement is underestimating the amount of money they will need. I know when I first became a financial advisor, I learned a client should expect to need about 60 percent of their working income in retirement. This makes no sense, ask yourself, “what expenses are you paying for while working that will vanish when you stop working”? Sure, you may not have to spend as much money on work clothes, but is that one of your biggest expenses?

Considering many people are living longer, healthier, and more active lifestyles, I believe it is reasonable to plan on needing income after retirement for 30, or more years. Particularly, if you’re a couple planning for retirement. If you’re planning on having fun in retirement and looking forward to having the time for favorite hobbies, travel, and perhaps the other things on your bucket list; it may cost as much, or more, than your expenses while you were busy working.

If you consider these 10 retirement concern’s you will increase the chances of a happy retirement:

1. You need to make good choices on what you spend money on, overspending and not having the money after spending for savings will cause failure. This could be for yourself, or loved ones. Remember, justifying your spending does not solve the problem of a retirement shortfall.
2. Pay yourself first, always invest as much money as possible with pretax dollars into your employer retirement plan and make sure to maximize all available employer matching contributions.
3. Take the time learning about your investment choices or find a qualified financial advisor to assist with choosing among your 401(k), or other retirement plan options. Also, pay attention to your investments and make allocation changes if needed as market conditions change. This is not a set it and forget it situation.
4. Don't stop at maximizing your companys retirment plan contributions. If possible, start a non-qualified savings plan to invest more after your company’s retirement plan caps out. Also, if you don’t have a plan at work, set up a self-directed IRA plan. If you’re a stay-at-home spouse, set up a self-directed Spousal IRA and make contributions based on your spouse’s income.
5. Stop supporting Spendthrift children, or other people who won’t accept responsibility for their own expenses at your peril!
6. Don’t retire before you have saved enough because you’re sick of your job. I guarantee you are going to be a lot unhappier broke in retirement than you will be having to find a better situation with your job. Just because you are unhappy, or frustrated with your current job or boss, doesn’t mean you should retire. Find out if there are other positions at your company, or find another opportunity at a new company, maybe a new role, or maybe a completely new industry. Clients often tell me when they finally forced themselves to make a career change, they found they were happier than ever! Sometimes, because they found something they were passionate about they ended up making more money. Sometimes they have loved what they were doing so much they delayed retirement. Also, retirement is not black and white, consider a part time job in retirement. The longer you wait to rely on your savings nest egg as your primary source of income, the more time you have to let it will grow and the better off you will be. Even if you make less money working part time, it can make a big difference in your long-term retirement savings.
7. Make sure you have evaluated all of your available Social Security options before you start taking income. Have your financial planner, or the Social Security office run “all” of your income options. Delaying your start date can make a huge difference over your lifetime, each year you wait can increase your income by 8%. You also need to consider spousal strategies, it's not just about you. This includes the options that may be available from previous marriages, or deceased spouses.
8. Evaluate your pension options. Many Americans worked for companies who have, or had monthly pensions as a benefit. This was a common benefit before 401(k)’s and other corporate and non-profit plans were common. Often these have options and you need to make elections for deciding on lifetime income, or joint life with spouse, or you can take cash in a lump sum. Talk to a qualified specialist outside of the company to evaluate what is best for your personal situation.
9. Make a solid debt management plan by focusing on paying your highest interest debts first. Often, I see people focusing on paying off their low interest mortgages which may offer potential tax benefits while not paying off high interest credit cards, or credit lines with no tax advantages.
10. Your retirement plan should not rely on an inheritance for retirement income. The people you are relying on may not have as much money as you think. Also, while you think you are the person someone is planning on leaving their money to, you may be in for a big surprise.

Successful retirement planning requires making hard choices long before retirement. The earlier the better. I suggest clients work with a CERTIFIED FINANCIAL PLANNER™ practitioner who makes retirement planning central to their business and complete a comprehensive plan. Ideally, this should be done at least 10 years before your earliest wishful retirement date. If it's too late for that, do it now! Wherever you are in life you need to establish a baseline of where you are today. With this information you can develop a road map of where you want to go. You’re still not done then as you still need check points, maybe annually, but for sure every other year to see how you're doing and to make any needed adjustments along the way. This is important, hoping things work out for retirement is not a good plan.

The Hoffman Private Wealth Group can help you complete a Comprehensive Financial Plan. We can also help you evaluate your Social Security and Pension options. If you would like to set up a Complimentary Consultation to speak with us, CLICK BELOW.

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Todd M. Hoffman CFP^®, CPM^®

Founding Partner
Executive Managing Director
Senior Portfolio Management Director
Wealth Manager