Retirement Planning Checklist

It’s never too soon to start saving for retirement. When you’re young time is on your side. If used wisely it’s your greatest asset. However it can be the biggest detriment as retirement seems so far off. It’s easy to put off saving until next year, and then next year, and so on. Next thing you know you’re 45 and wondering why your nest egg is so small.

Likewise, it’s never too late to start saving. It’s better to start late than not at all.

The future is in your hands and so is your financial security. You can’t rely on Social Security, there’s a possibility it won’t be around for you.

20s and 30s

• Max out tax deferred retirement plan contributions – If your employer offers any kind of match to your contributions, be sure to take advantage of that. A 50% employer match means that if you contribute $100/month, your employer will add another $50. And with a tax-deferred plan, your contribution of $100 will reduce your paycheck by only about $80. By giving up $80 of monthly spending, you gain an investment of $150/month. After 25 years with an 8% return, the result is $142,000 for retirement! But don’t stop there! As you start to make more money, minimize lifestyle inflation and put those raises towards retirement savings.
• Fund Roth IRAs to the maximum amount allowed – Funding a Roth IRA provides you non-taxable income in retirement.
• Establish and maintain an emergency fund – Unplanned expenses can derail retirement saving and also send you into debt. Maintain an adequate Emergency Fund to fall back on in case you lose your job, experience a medical emergency or to cover other unplanned expenses.
• Avoid debt – Do you really want to give your hard earned dollars to a bank in the form of interest? Avoid the debt trap and put those dollars in a high-interest savings account and let the bank pay you instead!
• For aggressive wealth builders, acquire a positive cash flow rental property – Rather than rent an apartment buy a starter home or a small apartment building that you can live in now and use as rental units later. A 30 year fixed rate mortgage will be paid off by the time you are ready to retire and you will have inflation adjusted income you can never outlive.

40s and 50s

• Build your financial intelligence to avoid costly investment mistakes
• Create your first ballpark estimate – According to the American Savings Education Council, Americans who have done a retirement calculation have nearly five times the savings of those who haven’t.
• Establish plan to be debt free by retirement
• Consider reviewing your retirement plan with a fee-only Financial Advisor
• Evaluate investments for age/risk profile
• Take care of your health

5-10 Years from Retirement

• Update your ballpark estimate
• Compare revised estimate to current savings. Work to close the gap.
• Are you on track to be debt free by retirement? Work to payoff debt.
• Evaluate investments for age/risk profile
• Determine retirement locale, do you plan to downsize?
• Take care of your health

1 Year from Retirement

• Estimate a budget for retirement
• Consider part time jobs if you need to stretch your retirement savings
• Speak with a Social Security representative to determine when you should apply for benefits.
• Review will and power of attorney; ensure that beneficiaries on retirement accounts are up to date.
• If retirement comes before Medicare eligibility, make plans to purchase private health insurance or continue your employer’s plan through COBRA.

Everyone’s vision of retirement is different. But hopefully with this Retirement Planning Checklist you’ll be able to realize your vision and enjoy your retirement years free of stress and anxiety.

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Tagged as: Money Management, Retirement