Your Comprehensive Retirement Checklist

By Andy McNamara on July 16, 2021
Categories: RETIREMENT

Retirement is a big decision – perhaps one of life’s biggest decisions. Inevitably, at the end of a long career, you might think about retiring and being able to travel, visit grandchildren, pursue hobbies, or get involved in community organizations – essentially, you want to spend your time however you’d like, and not have to worry about the alarm clock anymore. However, the actual logistics of the retirement process can seem very overwhelming for some, which is why it is important to have a guide of what to ask yourself as you contemplate this next phase of life.

There is a lot of financial planning and coordination that must happen for a successful retirement and with that come a lot of questions. How am I going to create income in retirement? How am I going to find the right San Diego financial advisor to discuss my retirement plan? How much can I actually spend each year? Can I afford to take my kids and grandkids on the vacation that my spouse and I have always dreamed of?

As financial planners, the question that comes up the most is:  Have I saved enough to ensure I won’t run out of money in retirement? While that question may be the most important, consider some of these lesser asked questions to discuss with a financial advisor about as you get closer to your retirement date.

Planning Your Retirement Expenses

Throughout your working career, you save into different retirement accounts such as a 401(k), 403(b), Traditional and Roth IRA accounts, as well as trust accounts to ensure you have enough money when it finally comes time to retire. The first building block of assessing retirement readiness is knowing how much you can spend each year to ensure you will not run out of money. Therefore, when crafting your retirement checklist, first think about how you are planning for your expenses.

Creating a retirement budget to understand which expenses will be reduced, eliminated, or added in retirement is crucial. A few questions to consider are:

  • Will your mortgage be paid off in retirement?
  • Do you currently support or anticipate needing to provide monetary support to family members?
  • Do you anticipate paying for any weddings or family vacations in retirement?

Another part of planning for retirement expenses that can be overlooked is forgetting to plan for expenses that are currently covered by your employer or the business you own. So, ask yourself if in the future, will you be responsible for paying for any of the following:

  • Vehicles
  • Utilities
  • Medical and Dental Insurance

One potential way to simplify your retirement spending is to plan for the major expenditures that will come up in retirement and consider paying for them now.

  • Do you have any major planned expenditures for your home?
  • Should you pay off your mortgage?
  • Will you need a new car soon?
  • Are you anticipating any major medical or dental procedures?

A frequent comment we hear from clients is, “I have no idea how much my health insurance is going to cost in retirement.” With healthcare expenses, it is important that you plan for health insurance pre-Medicare and beyond. Some questions to consider are:

  • Will you stay on your employer’s plan through COBRA for a maximum of 18 months?
  • Does it make more sense to get a policy through Covered CA?
  • Does your employer offer “retiree health care coverage”?
  • Once you are on Medicare, which type of supplemental coverage is right for you?
  • Are you taking full advantage of your ability to contribute to a Health Savings Account?

Lastly, a few other things to evaluate when you are planning for your retirement expenses:

  • Are there any benefits that you can take with you such as long-term care insurance that are portable at retirement?
  • Does it make sense to make a charitable gift prior to retirement to offset what might be your highest year of income?

Planning Your Retirement Income

Retirement is a unique, but potentially daunting, time in your life where you will no longer be receiving a steady paycheck. It will be up to you to create your income from the liquid assets you have saved combined with any income you may be receiving in retirement such as a pension or rental income. In terms of retirement tax planning, deciding how to access your assets in the most tax efficient way is important as well; because you won’t have the ability to lower your taxable income by adding into retirement accounts.

Have you heard of Sir Edmund Hilary? He is widely credited as the first person to summit Mt. Everest. But an often-overlooked fact is that he is not only the first person to summit Mt. Everest, but he is the first person to summit AND make it back down the mountain to tell his tale. Retirement can be similar – you have been working your way up the mountain by saving throughout your working years, but if you don’t have a plan for how to “go back down the mountain”, your retirement savings could be doomed like the explorers before Sir Hilary. Which is why it is vitally important to:

  • Have a retirement plan for how you are going to withdraw from your liquid assets to create the income you need to live on.
  • Assess what is the most tax efficient way to access your assets in retirement.
  • Have a plan for when you should claim Social Security based on your individual circumstances.
  • Consider other fixed income from pensions, annuities, or other streams of income and how they will coordinate with your liquid assets to create retirement income.
    • If you are entitled to a pension, understand which income option is the most beneficial based on your situation.
  • Analyze Roth conversion opportunities in retirement to create tax free income that can be accessed later in retirement.

Planning Your Retirement Lifestyle

Now that you have figured out how you are going to access your money in retirement, it’s time to start thinking about what you want to do in retirement. Retirement can be overwhelming for some as you consider how you will spend your day now that you are not commuting and working 40+ hours a week. You may just want to travel, relax, and spend time with family and friends, or perhaps you will want to get more involved in local charities or work as a consultant.

Furthermore, many people have an emotional attachment to their job as part of their identity, so it is important to have at least a rough idea of how you will spend your time on a daily/weekly basis to make sure you stay fulfilled and happy. Whatever you decide to do, here are a few items to add to the pre-retirement checklist when planning your retirement lifestyle.

  • Will you work or volunteer in retirement? If so, in what capacity?
    • Will you be a consultant and work 20 hours a week?
    • Or perhaps volunteer at the local charity a few hours a week?
  • Do you plan to relocate after you retire?
    • If so, how do the expenses and taxes in that city/state compare with your current location?
  • Do you plan to travel in retirement?
    • If so, does that mean going on an international vacation with family and friends each year?
    • Or does travelling mean going to visit all the national parks you have always wanted to visit?
    • Either way, it boils down to having a grasp on how often you want to travel and how much those trips will cost, as they will impact your retirement savings. Understanding how to budget for a vacation will be of great importance if you have intentions to jet off in retirement.

Portfolio Considerations For Your Retirement

Once you have an idea of how you will spend your time in retirement, it is important to reassess the liquid assets that you have saved for retirement to see if any changes should be made. Here are a few portfolio considerations as you approach your retirement date:

  • Are you comfortable with your current asset allocation?
    • Most people tend to want to be more conservative with their portfolio during retirement as they are no longer receiving a steady paycheck.
    • Consider the tax impact of reallocating your non-retirement accounts.
  • If you have a concentrated stock position from accumulating shares over the years, what is your plan for how you will reduce the concentrated position to better diversify your portfolio?
  • What is your plan for your employer’s retirement plan?
    • Is there an opportunity to take advantage of Net Unrealized Appreciation (NUA) within your 401(k)?

Additional Considerations For Your Retirement

We’ve talked about the importance of planning for retirement expenses, planning your retirement income, planning your retirement lifestyle, and also portfolio considerations as you contemplate retiring. Even with all that covered, there are still some additional considerations to place on your retirement checklist.

Throughout your working years, you probably had some sort of “rainy day” savings. Now that you are entering retirement, has the amount that you want for “rainy day” savings increased? If so, where will that liquidity come from?

One area of retirement planning that some people fail to quantify is if there is anything they may be “leaving on the table” by retiring. It is important to understand how much you are “leaving on the table” when you retire, as it may affect the quality of your retirement or the longevity of your assets. This could include:

  • Forfeiture of unvested Stock Options or unvested RSUs
  • Potentially decreased pension payments
  • Potentially decreased Social Security benefits
  • Loss of employer matching 401(k) contributions
  • Cessation of Annual Bonuses
  • Loss of additional Non-Qualified Deferred Compensation

Another consideration before entering retirement is making sure your will and/or trust is up to date. You may not have had time to update it recently, or more likely your circumstances have changed since you first executed your trust, so make sure you take the time to revisit your estate plan and review your asset allocation before you retire.

Bottom Line

It should be obvious by now that there is a lot that goes into retirement planning. This list of considerations is only a starting point, and each individual or couple’s own retirement goals and mix of accumulated assets is unique. This is why having someone to help you make these decisions and act as a sounding board can boost your confidence as you enter retirement. With all this in mind, consider working with one of Dowling & Yahnke’s Certified Financial Planner® professionals to create a financial plan that ensures you are ready for this exciting new phase of life!


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