Retirement Planning – figure out what to do by the numbers!

Retirement Planning Checklist

How much money do you need to retire comfortably?

The retirement planning process requires retirement planning and a retirement plan. Most people don’t look forward to the retirement planning process, retirement yes, the process not so much.

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Retirement Checklist

Take inventory of your assets.

First things first: You need to figure out where you stand financially. Evaluate your budget. Write down every debt, liability, savings balance, income stream and insurance policy you have. Don’t forget about properties, vehicles and other valuable possessions that affect your bottom line. A good way to do this is by creating a worksheet that you can adjust on a regular basis. This process will allow you to assess your current financial situation and plan accordingly.

Build an emergency fund.

Before you take any major financial step, you want to be sure you’re protected should things not go according to plan. Hopefully you aren’t learning about emergency funds for the first time when you’re within years of retirement. But if you have somehow gotten this far without a financial security blanket, now’s the time to create one. It will cover you in the event of personal catastrophe, and it can also make up for delays in the start date of your pension

Eliminate all debt.

So, how should you tackle your debts? There are generally two thoughts on where to start: either by paying down debts with the smallest balance or debts with the highest interest rates. If you can stomach it, we suggest starting with highest-interest-rate debts. This is usually credit card debt, followed by personal loans and car loans. And we don’t just mean hitting the monthly minimum. To really make a dent, you’ll have to put as much money as you can to paying down your priority debt without sacrificing making the minimum payments on other debts.

Determine your retirement needs.

Before you can retire, you have to decide how you want to retire. Consider where you want to live, whether you’ll have a job (this may sound crazy, but some people like to work in retirement) and what your expenses will be. Try to be realistic in terms of retirement length, too. This can be difficult to predict, but you can always refine your estimate down the line.

Square away health insurance.

Healthcare is one of the biggest expenses you’ll face in retirement. According to the Bureau of Labor Statistics’ Consumer Expenditure Survey, healthcare costs account for an average of 11% – 15% of retirement spending, depending on the retiree’s age. Don’t feel bad if this means you have to make a quick adjustment to Step 4.

Plan your estate.

No one likes to think about their demise, but as you near retirement you’re also realistically getting closer to the end of your life. Being prepared with an estate plan will ensure your family is not plagued with financial burden after you’re gone and that your money is dispersed according to your desires.

Investigate retirement investments.

It’s never a bad thing to have more income. One of the worst mistakes American workers make is designing their investment portfolio around their retirement date. This leaves little earnings potential for their post-retirement life.

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Learn how to withdraw funds.

If you have an employer-sponsored plan, figure out if you want to leave money there or roll it into an IRA account. Consolidating is probably the better option if you’re over 59 1/2. At this time, you can take money out of your retirement accounts without incurring an early withdrawal penalty. By 70 1/2, the law requires you to take required minimum distributions (RMDs). You should make your decision based on what’s both tax-efficient and what you and your family feel most comfortable with. You can work with the institution that manages your funds to figure out how withdrawals work.