Retirement Planning Checklist
Planning on retiring soon? Consider this retirement planning checklist!
May 28, 2025 - Retirement is a major milestone. Preparing for this transition requires thoughtful planning to ensure financial security and a fulfilling future. There is more information available than ever for future retirees, making it necessary to filter out noise and get to actionable steps that can add value to your retirement planning process. Here are some things to consider:
Re-define the word “retirement” – In the old days, retirement was leaving the factory at age 65 to go home and sit on the porch for a few years. In this age, retirement could be called “making work optional.” Consider your retirement as a stepping stone to changing careers, changing focus, or changing purpose – a time when you can do what you want because your financial success allows you to.
Understand the financial industry’s definition of retirement – Sometimes the financial industry uses “retirement” as a euphemism for high cost, high commission financial products that may or may not be in your best interest. Be very careful when thinking about purchasing annuities, especially if there is a surrender charge (a litmus test for a questionable product).
Re-define “retirement accounts” – Traditionally, a retirement account (such as 401(k), 403(b), 457, IRA, Roth IRA, or HSA) is where an investor parks money to live on in retirement. However, the most significant difference among accounts is how they are taxed. We like to think of these accounts as a way to manage marginal tax rates.
Manage your marginal tax rate – Your withdrawal strategy is significantly influenced by your tax rate. Money going into or out of “retirement accounts,” spending patterns, charitable giving, and investment strategies should all be influenced by your marginal tax rate and carefully managed in retirement. Don’t pay more than necessary to the government in your retirement years.
Focus on your net worth – Traditional retirement planning sometimes focuses on replacing your income. Our view is that investors should have a hyper-focus on their net worth - what you own minus what you owe, which leads you to being able to determine your lifestyle.
Project your expenses – Financial projections are helpful in knowing how much money will be needed when, and how that will impact net worth. A projection will help with budgeting and cash flow planning.
Cash flow planning – How much will I be living on per month or year? What account will we live out of? How can we make sure we are not over or under spending? These questions should be answered in a retirement plan.
Plan on shifting expenses, including healthcare costs – The early retirement years often result in higher expenses for things like travel, home remodeling, and gifts. This is often replaced later by higher out-of-pocket medical expenses. Don’t forget to plan for this change.
Long term care risks – Long term care is a risk that can be covered with an insurance policy, but often it is not clear to consumers what benefits the policy provides. Sometimes the retiree may do better taking on the risk themselves. Be sure to earmark funds for this eventuality in the best way for your situation.
Inflation – Traditional pensioners are concerned with inflation if their benefits do not include a COLA (cost of living adjustment). Considering the possibility of a very long retirement, inflation can erode lifestyle. This should be planned for.
Diversify investments – Diversification is a way to reduce risk. We often see pre-retirees who are taking significant risk by clustering their investments in one small area of the capital markets. This is easy to do. Investors sometimes have many different securities or funds in their portfolios, feeling diversified, when sometimes these investments tend to act the same in down markets, which can mean the investor is taking too much risk.
Social security strategy – There are multiple ways to claim Social Security. Unless you know the day you will pass away, it may not be clear which is best for you.
Estate plan – Any life transition is a good time to review an estate plan. The most common first step is to make sure you have an updated will, medical directive, and power of attorney. However, that is only the starting point for many families. Beneficiary forms for any retirement account or insurance policy should be updated, as well as considering a trust in complex situations. There is a significant amount of misinformation about trusts available today. Trusts can be a great tool in the right circumstances, and there are many types of trusts available. Titling of assets can also influence the estate plan. An estate plan that is not up to date, especially in a blended family, can result in tragic consequences for generations to come.
Legacy planning – What am I teaching my children and grandchildren about money in general, my money, and the money they will inherit? The legacy you want to leave takes a thoughtful approach.
Stress-test your plan - Before retiring, test your plan under different scenarios, such as market downturns or unexpected expenses. This will help you identify any vulnerabilities and adjust your plan to ensure it is robust and adaptable. Assuming any capital market will have consistent returns is unwise. Capital market returns are random and fluctuate wildly over long periods.
Senior housing – Seniors often want to “age in place.” This works until it doesn’t and sometimes results in having to move to a senior housing facility after a rapid health decline, putting stress on the family. Have a plan in place about the next step and consider moving to where care is before a crisis.
Plan for different personality types – If you are married, it is likely the two of you don’t approach money the same way. A retirement plan should consider both personalities and especially consider the needs of the less fluent / less interested spouse.
Plan for one to outlive the other – A retirement plan should consider what life will be like and how money will be managed if one spouse is left, and especially if the less fluent / less interested spouse survives. If the surviving spouse is left with a complex situation, will that person be successful in managing it on their own?
Communicate with family – It takes a thoughtful approach to know what to share with family members about a retirement plan. In some families, it is best to share everything, and in some to share nothing. If nothing, should there be an outside relationship that has knowledge of the situation and provides accountability?
Get a second opinion – If you are unsure about your retirement plan, get a second opinion.
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Information presented is for educational purposes only and is not personalized investment, financial, legal, tax, or accounting advice. Nothing on this website should be interpreted to state or imply that past performance is an indication of future performance. All investments involve risk and unless otherwise stated are not guaranteed. Be sure to consult with tax, legal, accounting, and financial professionals about your specific situation before implementing any planning strategies. Investment Advisory Services offered through Timberchase Financial, LLC, a Registered Investment Adviser with the U.S. Securities & Exchange Commission. Registration does not imply a certain level of skill or training.