Retirement Planning Checklist

Retirement Planning Checklist

A preparing for retirement checklist can help increase your confidence when making this major life change. Many people approach retirement with a mix of emotions, including anxiety, excitement, and trepidation. Evaluating your budget, Social Security income, and healthcare costs is essential as you decide to stop working and earning income.

Use this preparing for retirement checklist as you weigh the benefits of retiring later, such as delayed portfolio withdrawals, larger Social Security benefits, and more retirement plan contributions, against the quality-of-life benefits associated with retiring early. Consulting with a knowledgeable financial planner near you can provide personalized guidance to ensure you’re making the best choices for your retirement planning and overall financial well-being.

1. Estimate your retirement income needs

Formulas and calculators can help you determine an approximate post-retirement spending budget. A general rule of thumb is to budget about 80% of your current budget. Some expenses (taxes) may decrease after retirement, but others may increase.

Consult with your financial advisor as you consider your financial investments, debts, and obligations. Factors such as downsizing or moving to a lower-cost-of-living geographic area can have a significant impact on your income requirements.

To best estimate your retirement income needs, go through each line item on your budget over the past five years. Calculate whether each will rise, fall, or remain the same after retirement.

2. Inventory your assets and savings

If Social Security or a pension will not adequately replace your income, consider whether interest earned on your assets and savings, as well as the percentage of savings you plan to withdraw, can make up for the shortfall.

Calculate your withdrawal rate by dividing the amount you plan to withdraw from savings by your savings portfolio’s current value. Many people use a 4% withdrawal rate when determining how long their savings are likely to last.

Once you determine your anticipated retirement spending needs and compare this number to your assets and savings, the next step is to consider how investing in annuities, stocks and bonds, and dividend-paying equities can provide a steady income throughout your expected lifetime.

If you are over 50, you can contribute more per year to tax-advantaged retirement accounts. Maximize any employer-matching contributions to boost your retirement income and reduce your current tax burden.

3. Pay attention to taxes

Most people have retirement accounts with a variety of tax treatments, including tax-deferred, taxable, and Roth. When planning how to use your assets to maintain cash flow throughout your retirement, it’s crucial to consider the required minimum distributions from these accounts and your taxable income.

The best time to consult with a tax advisor is before you need to make the required minimum distributions. They can help you determine whether making changes, such as converting traditional IRAs to Roth IRAs, is a beneficial tax-saving strategy.

4. Determine when best to claim Social Security benefits

If you are eligible for Social Security benefits, determine whether collecting them early, at full retirement age, or late is your best option. There are pros and cons associated with taking Social Security early or late. Claiming your benefits early will permanently reduce your monthly benefit payouts.

If you collect your Social Security benefits beyond your full retirement age, you will receive higher monthly checks. However, it is important to consider your health risks and family history of longevity when determining your likelihood of living past the point where you breakeven, whether you collect early or late.

If you’re eligible for a pension, meet with your pension plan advisor to discuss your options, especially if you are married. Some pension plans, for example, offer the option of receiving a reduced pension payment over your spouse’s lifetime.

5. Review your insurance coverage.

Some types of insurance, such as auto and homeowners’ insurance, will continue unchanged as you transition from working to retiring.

Consider healthcare options such as enrolling in your spouse’s medical plan, obtaining insurance through the federal Health Insurance Marketplace, using COBRA coverage from your previous employer for up to 18 months, or using a short-term plan through an insurance broker if you retire before the age of 65 when you are eligible for Medicare.

Traditional Medicare plans include Part A (hospital insurance) and Part B (medical insurance). You can also enroll in Medicare Part C, commonly called Medicare Advantage Plans, and Part D, which is a Medicare drug plan.

Medigap is an extra insurance policy that retirees can purchase from a private health insurance company to help pay out-of-pocket healthcare costs associated with traditional Medicare.

Long-term care insurance is another important consideration. Consider your likelihood of needing long-term care and your financial ability to pay these costs to determine whether long-term care insurance or self-funding makes more sense.

6. Create or update your estate plan

A comprehensive estate plan outlines your healthcare goals, as well as who will make decisions for you if you become incapacitated.

Update your will, create a trust, and update the beneficiaries on all of your accounts. Your estate planning attorney can help you create an estate plan that ensures your assets are distributed as you intended and your loved ones are taken care of.

It is essential to make these estate planning decisions when you are of sound mind and body. Marriages, deaths, and births in the family are excellent triggers for updating your estate plan.

There is no one-size-fits-all guide to investment. Working with a wealth manager who uses a fee-only financial planning structure can ensure you make the best financial decisions for yourself and your loved ones. For personalized guidance tailored to your unique financial goals, contact us today.

Gabriel Katzner

In 2002, Gabriel Katzner, received his Juris Doctorate with honors from the Fordham University School of Law. After spending the first 7 years of his legal career practicing at Cahill Gordon & Reindel LLP, an international law firm based in New York, he went on to found his own firm.
Building on his legal background, Gabriel’s vision emerged during his tenure at Katzner Law Group, where he excelled in estate planning, forming deep client connections. Recognizing the fleeting nature of traditional estate planning and the lack of comprehensive financial guidance, Gabriel conceived Frame Wealth Management. His commitment to lifelong client partnerships drove him to earn credentials as a CERTIFIED FINANCIAL PLANNER™ and CPWA® professional.

Frame Wealth Management, Gabriel Katzner

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