Checklist For Retirement Planning: Create and Maintain a Plan You Can Feel Great About

Checklist For Retirement Planning: Create and Maintain a Plan You Can Feel Great About


Despite what many quick retirement calculators lead you to believe, retirement planning is an ongoing process and not something you can do in 5 minutes. Here we break down the steps for creating a plan. Use this checklist for retirement planning if you want to feel great about your financial future.
checklist for retirement planning
Whether your are fabulously wealthy or just getting by, there are four key phases to achieving a secure retirement. The four phases of this checklist for retirement planning are:


  • Getting started
  • Finding confidence
  • Maximizing wealth
  • Keeping your plan updated and making adjustments

Getting Started

The first phase of this checklist for retirement planning has four parts and is about getting organized and educated.

1. Do You Have a Written Plan? Is it Detailed Enough?

What is the saying? “You can’t get somewhere if you don’t know where you are to begin with…” Something like that anyway…

Whatever the origins of the quote, it is definitely true of retirement planning.

Writing down your retirement plan is really the first step to achieving a secure future. This easy step is proven to reduce stress and make you feel better — more confident — about your future.

You can enter just a few data points and get a rough idea of where you stand.

But, is it detailed enough? You can’t really feel good about your retirement plan until you add a lot more detail. Most retirement calculators ask for 5 or 10 pieces of information. Good planners ask for a lot more. The NewRetirement retirement planner has 33 different sections that enable you to create a detailed plan.

At a minimum, you want to make sure that you have:

  • All of your spouse’s information collected separately from your own
  • Entered all sources of retirement income: retirement jobs, pensions, annuities, income from investments, passive income and more
  • Included medical costs and the possibility of long term care costs
  • Documented inflation rates for general expenses, medical cost and housing — these typically rise at different rates
  • Thought carefully about your expenses and how they will change over the 20-30 years you’ll be retired
  • Budgeted any big one time expenses
  • Documented debts and how you are paying them off
  • A full understand of your retirement accounts and their rates of return

Hopefully the NewRetirement Planner makes it easy for you to create a detailed written plan.

2. Do You Fully Understand Your Plan?

Once your plan is detailed enough, you will want to take a really hard look at whether or not it is adequate.

  • When — if ever — do you run out of money?
  • How balanced is your cash flow? Do your expenses exceed income? Are you tapping savings?
  • What is your net worth now? What will it be?
  • How much savings do you have now? What will the value be of those savings next year and all the years thereafter?
  • How much should you have saved now? What are the benchmarks for future years?
  • What risks does your plan face?
  • How do you compare to others in your zip code?

It is easy to get answers to all of these questions with the NewRetirement Planner. If you are still concerned that you might not understand something, it might be a good idea to speak with a financial planner.

3. Is Your Plan Accurate?

When you create a detailed retirement plan, it can be difficult to keep track of all the details. There are literally thousands of numbers that make up your plan.

It is important to review your own inputs. However, you may also want an expert look at your numbers. NewRetirement offers two ways to get a professional assessment of your plans:

  • You could work with a financial advisor. NewRetirement Advisors is a new kind of advisory service, focused on providing very affordable financial planning built upon the NewRetirement Planner. You get a knowledgeable advisor to look over your financial situation and make recommendations.
  • PlannerPlus Coach uses best practices and the power of technology to monitor your plan and alert you to big risks, oversights and opportunities to improve your finances.

4. Have You Identified What You Want to Be Doing in Retirement?

Retirement planning shouldn’t be entirely about calculations. You really also need to think about how to spend your time and with whom.

Without a plan for life after retirement, many retirees find themselves feeling vaguely unfulfilled and restless, craving something more but not knowing what that something might be. Focusing on the financial aspects of retirement is important, but the personal side of your retirement plan is just as important, and could ultimately guide how you use your retirement assets.

Can You Feel Confident About Your Future?

The second phase of this checklist for retirement planning has five parts and is about tweaking your plan so that you can feel truly confident that your future is secure.

1. Do You Have Enough With Both Optimistic and Pessimistic Projections?

There are a lot of things that you need to know to predict your financial security. The trick is that some of these things you can’t actually know. You need to make guesses about inflation (general, medical costs and housing) and returns on investments.

One way to feel confident about your future when there are so many unknowns is to create an optimistic as well as a pessimistic scenario.

Unlike many calculators, the NewRetirement Planner lets you set all of these assumptions — both pessimistically and optimistically — for yourself. And, we encourage you to strive to have a retirement plan that insures financial security with both sets of assumptions.

If you have not achieved these metrics, you may want to look at working longer, getting a retirement job, reducing expenses, tapping home equity, boost Social Security benefits, improve investment returns, save more, establish passive income and more…

Play with all of these scenarios in the retirement planner until you have achieved your goals.

2. Do You Have an Income Plan? Have You Guaranteed Enough of Your Income?

Once you have established a plan that suggests that you will be secure with both optimistic and pessimistic assumptions, you may want to strive to establish a more detailed retirement income plan.

You will want to answer the following questions:

  • Does your income cover your expenses? To help see this, review the cash flow charts in the planner.
  • What sources of income are you relying on? You can see this detailed in the PlannerPlus Income Inspector.
  • What are the risks to your sources of income?
    • What level of certainty do you have that you can work as long as you intend to work?
    • If you are relying on withdrawals from savings, have you protected those savings from market forces?
    • If you have a pension, does the company have the funds to pay that pension?

Perhaps most importantly, you should consider whether or not you want to guarantee adequate income to cover your expenses? Social Security, pensions and annuities are guaranteed — you will receive them for your lifetime. Most other sources of income are not completely reliable.

If your guaranteed income is less than your necessary expenses, you may want to at least model a lifetime annuity in your plan to see if it is a cost effective way to give you real confidence in your financial future.

Learn more about retirement income with: 18 strategies for lifetime wealth

3. Can You Afford Medical Care?

The average lifetime out of pocket costs for healthcare for a 65 year old couple retiring today is $285,000.

That amount is more than most people have in retirement savings.

A few tips for tackling medical costs in your retirement plan:

  • Be sure you understand if medical costs are being calculated and, if yes, how. The NewRetirement retirement planner automatically builds in average retirement medical costs and will tweak those costs depending on whether or not you have supplemental Medicare coverage.
  • Actively shop for the best Medicare supplemental policy each and every year. Your health will change and the policies change. It is worthwhile to rethink your coverage annually.

4. What to Do About the Potential for a Long Term Care Need?

Out of pocket medical costs can be staggering. However, they won’t cover what might be the biggest health care cost in retirement — a long term care need.

About 70% of people who turn age 65 will need some type of long term care in their lifetime, according to the U.S. Department of Health and Human Services, but few are prepared to pay for that care.

Strategies for funding these costs include:

The NewRetirement planner lets you model these strategies. Try a couple different options and be prepared.

5. Have You Anticipated any Other Potential Gotchas? (And “give-yas”)

We are covering a lot on this checklist for retirement planning, but you still need to be prepared for other gotchas — expenses you might not have anticipated. You should also be prepared for “give-yas” — unexpected windfalls.

Here are two considerations:

Have an Emergency Fund: A survey released by the Federal Reserve Board found that 47% of American consumers report they would not be able to come up with $400 for an emergency without borrowing or selling something. That’s half of the country living in a continual state of financial peril. You need to have readily available funds to use if your car breaks down, a family member needs help, natural disaster strikes or some other emergency arises.

Think Through Your Future Spending: Imagining your future in as much detail as possible can help you budget appropriately for retirement. A few things to consider:

  • Will your kids graduate college and hopefully be on their own so your budget will be freer?
  • Are you prepared to help your own parents with a long term care need?
  • Will you receive an inheritance?
  • Might you sell your vacation home at some point?
  • Is there a possibility for divorce or remarriage?
  • Are you ready for the death of a spouse?

The NewRetirement Planner allows you to set different levels of spending for different time periods in your life. You can also set up major one time expenses and income events. And soon the PlannerPlus Budgeter will enable highly detailed budgeting.

Maximize Your Wealth

The third phase of the checklist for retirement planning is about maximizing your wealth — growing or getting as much out of your money as you can.

1. Do You Have the Right Asset Allocation?

Depending on your financial situation, you may have very different asset allocation goals. Some people can live comfortably off income from their assets. Others can grow their net worth — even after retirement. And, still others need to make withdrawals to make ends meet.

You need to make sure that your asset allocation strategy really meets your specific goals. Learn about creating an investment policy statement, or consider working with a financial advisor to help you position your savings to really maximize your wealth.

2. Have You Minimized Tax Liabilities? Maximized Tax Efficiencies?

The average American pays about $10,500 a year in total income taxes — federal, state and local. Of course, many households pay a lot more and some people pay nothing at all — depending on your income level.

Ten thousand dollars is a big chunk — about 14% — of the average budget. So, if you think about it, taxes can be a bigger lever in your budget than investment returns, cutting expenses or waiting to claim Social Security for a bigger benefit check.

As such, it is worth worrying about your tax bill in retirement. Here are a few tips (though it is best to take taxes seriously and work with a financial professional):

Think about your income: In retirement, you have some opportunities to manipulate your income to minimize what you pay in taxes. You may be able to manipulate your income to put yourself in a lower tax bracket.

Using Roth IRAs: Used smartly, Roth IRAs and converting traditional 401ks and IRAs to a Roth IRA can really save you money.

Learn more about the Roth IRA and why a Roth conversion might be particularly appealing this year.

Take Your Required Minimum Distributions: If you’re 70 1/2 or older and have a traditional IRA, the IRS requires you to take a certain minimum amount from your account each year – and if you don’t take enough, you’ll be slapped with a huge tax penalty.

What’s worse, these distributions may knock you into a higher tax bracket. Here are tips for managing your RMDs.

Retiring to a low tax state — or even another country: Taxes are not equal in all states. The following types of taxes will vary from place to place: state income taxes, estate taxes, sales tax, property taxes and more.

3. Have You Established an Adequate Estate Plan?

The NewRetirement retirement planner lets you set a goal for leaving an estate. (You also have goals for funding retirement through your longevity using both optimistic and pessimistic assumptions.)

You can update your progress against your goals at any time. Of the people who have set an estate goal with NewRetirement, 89% are currently on track to achieve their goal for leaving a financial legacy.

The system also gives you a check list of all the documents you need to create and maintain for an adequate estate plan.

4. Optimize Housing and Spend Retirement in the Best Place for You

Where you live — your community and the walls around you — has a profound impact on your well being. Your home is probably also your single greatest expense and, if you own, it’s your most valuable asset.

Therefore, optimizing housing for retirement ranks close to the top in terms of the best retirement plans.

  • Figure out the best place for retirement (for you)
  • Explore housesharing
  • Downsize — reduce costs and the emotional burden of a large home.
  • Can you be happy in a tiny home?
  • What about retirement abroad?
  • If you already like where you live but need access to money, you might want to explore the pros and cons of a reverse mortgage?
  • Would you ever consider a mobile home park? (Time Magazine calls it the home of the future!)
  • Become a traveling gypsy, live aboard a cruise ship or crisscross the nation in an RV
  • What about a retirement community?
  • Could you? Would you enjoy moving in with family?

Keeping Your Plan Updated and Making Adjustments

The fourth phase of this retirement planning checklist is all about keeping your plan updated and making the necessary adjustments based on how your situation changes.

You should evaluate and update your whole plan and do a retirement check every time there is a change to any aspect of your health, finances or lifestyle. Small changes can have a big impact over your lifetime.

In addition to assessing your retirement plans when things change, a quarterly retirement check in can be an excellent way to keep your financial future on track.

After all, the economy marches onward. You will want to check to make sure that your:

  • Investments have grown in the way you expected
  • Projections for inflation are tracking as projected
  • Debt is being paid down as anticipated
  • Spending, saving and earning rates are tracking as you planned they would

If you have documented your overall retirement plan, then checking in is quick and easy. And, always reach out for professional financial help anytime you are feeling unsure.

NewRetirement Planner

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