8 Tips for Building a Useful Retirement Plan — Not One With Just a High Thunk Value

Everyone knows that they need a retirement plan.  But that means different things to different people.  And, not every plan is a truly useful retirement plan.

All too often a retirement plan is something that is prepared for you by a professional.  It is no doubt well thought out, but how exactly is it going to be useful to you?  Sure it will make a very satisfying THUNK as you dump it on your desk but how many people look at these professional plans, digest them, follow up and take actions for a better future?
useful retirement planYou need a useful retirement plan, not just a document with a high thunk value.

Here are 8 tips for building a useful retirement plan — not just a hefty stack of paper with pretty (though likely confusing) graphs and charts:

1. A Useful Retirement Plan is Comprehensive

Many people think that a retirement plan is merely an account with savings to be used for retirement.  And, they are not wrong.

However, your savings and investments are only one aspect of a comprehensive and useful retirement plan.  For most people, Social Security benefits, home equity, retirement jobs or even good health are actually more financially valuable than their savings accounts.  Therefore, it is critically important that your retirement plan look at everything that will impact your financial well being.

Inheritances, how much you spend (and how that spending will change), inflation and so much more are also hugely important  considerations.

  • The NewRetirement retirement planner is one of the the most comprehensive and powerful tools available.  Forbes Magazine calls the system “a new approach to retirement planning” and it was named a best retirement calculator by the American Association of Individual Investor’s (AAII) and CanIRetireYet.

2. A Useful Retirement Plan Is Something You Really Understand

There are so many hugely complicated parts to a comprehensive retirement plan.  If someone else does the plan for you or you use a simple retirement calculator or if you just try to do mental arithmetic, you are not going to fully appreciate the details.

Whether you work with a financial planner or not, it is a great idea to have a place where you can manage and track all the details yourself.  When you create your own plan and really engage in the process of planning, you gain more insight into how big and little decisions will impact your future.

You can begin to see how your finances will play out with a very real perspective.

  • The NewRetirement retirement planner will show how your cash flow, net worth, estate and out of money age change every time you update a detail.  This feature can really help you get to know what will materially improve your retirement.

3. A Useful Retirement Plan is Completely Personalized

Building a retirement plan requires some use of assumptions — things that are accepted as true or as certain to happen but without proof.

When planning, you need to make guesses about inflation, how much money you are going to spend and so much more.

However, some online retirement planning tools (and even some financial advisors) use a greater number of more general assumptions than other resources.

To have a useful retirement plan, it needs to be as personalized as possible.  For example, many retirement planning resources base their projections on the assumption that the retiree will spend 70% of their pre retirement earnings in retirement.  This may be true for some, but it is definitely not true for many others.

  • If working with a financial advisor, ask to see the assumptions they use for your plan.  If you are using the NewRetirement retirement planner, you know that you get to control an ever expanding list of details and you can always click on the “assumptions” link to review the additional data used by the tool.

4. A Useful Retirement Plan Combines Professional Help with Do It Yourself Tools

Good online retirement tools,  professional retirement advisors and other financial professionals are not mutually exclusive.

In fact, they often actually complement each other.  Research shows that many people don’t trust their financial advisor or even their banking institution.  The source of that distrust is usually rooted in not understanding why they are supposed to do whatever it is the advisor is suggesting.

If the client has a good understanding of their own financial situation (often gleaned from good online tools), then they are more likely to understand why an advisor might make certain recommendations.

On the other hand, using a retirement calculator may illustrate places where someone needs more help — from a professional.

  • Would you like help figuring out the right resources to help you with your retirement?  Email us your questions and goals and we can help you identify the right guidance.

5. Your Retirement Plan Needs to Be a Living Document

A useful retirement plan is not something you spend an hour or two on at one time.  It should be easy to get started but you need to spend significant time exploring and playing with all of your options.

In fact, this is one of the biggest complaints that people have about a formal written dossier about their retirement — they can not easily make changes and try out different strategies.

Never mind the fact that things change.

Retirement planning is not something that you do once and forget about forever more.

  • Use retirement tools and resources that enable you to make updates  at least quarterly and whenever anything about your finances change.

6. A Useful Retirement Plan Helps You Make Necessary Trade Offs

Life is messy.  You have competing priorities, values, interests.

When you first gather all of your financial information, it is unlikely that you will have documented your perfect retirement plan.  It is likely that you will need to make some adjustments and even assess trade offs.

Do you want to retire a little earlier and spend a little less?

Do you want to downsize and afford more travel?

Do you want to guarantee adequate income or go for high returns on your investments?

7. Your Retirement Plan Needs to Be Able to Serve Different Purposes and Different Stages

Your retirement planning goals are hugely different before you retire and when you are retiring or already retired.

Before you retire, your goal is about amassing and growing the maximum amount of savings in the most efficient way possible.

When you are retiring, your concern becomes how to continue growing while also spending those hard earned resources in the most efficient way possible.

8. A Useful Retirement Plan Helps You Make Decisions and Track Progress

Building a retirement plan is only part of the equation for having a useful retirement plan.

A useful retirement plan is one that enables you to research and learn more about different topics then go back and try different things with your new found insights.

You also want a retirement plan that helps you to make decisions and actually take the actions that are necessary for a more secure future.

Ready to work on your retirement plan?



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