If you don't plan where you're going, you'll probably get there. To have the comfortable retirement you desire, you need to plan ahead. In 60 minutes using this retirement planning checklist, you can lay the groundwork for the retirement you desire.
How do you want your retirement to look?
What is your average day? Where do you live? Do you work and if so, at what? Do you volunteer? Where? Do you see family members, friends, how often. Do you take vacations? How often and to which places. Develop a clear picture of what you want your retired life to be. This retirement planning checklist will be of greatest value if you take the most time on this step—actually defining what you want and putting it on paper.
This is most easily done with an Excel spreadsheet
Given the picture you created above of your retirement, list all of your expenses—everything from food to rent to vacations to health care , long term care insurance (use the long term care calculators to get cost) and total for the year. Now you know how much you need. On to the next step of our retirement planning checklist.
Take stock of retirement income sources
Of the expenses you calculated above, what income will you have in retirement? Go to the social security web site ssa.gov to get the estimate of your social security benefits. Will you have pension or other income or income from work? Also, from your investment assets, be conservative and assume you will withdraw 4% annually. For example, if you have a retirement nest egg—retirement accounts such as IRA, 401k and other investments of $500,000, assume you will withdraw $20,000 annually. This seemingly conservative assumption will insure that the pot lasts through your lifetime. Now you have the total income you have in place to offset the expenses above. Subtract the two. If you have a deficiency in income, that's okay for now. We address that in the next section of our retirement planning checklist.
Fix the Gap between income and expenses
If you have time until retirement, you can fix the gap by saving more and reducing your current expenses. If you're close to retirement, then you can save more by working longer or you can close the gap by reducing retirement expenses (e.g. living in a less costly area, reducing annual vacations from three to one. Or you can work part time in retirement. You do have choices.
Make a time line
Put it on paper. By when will you have saved your targeted amount, what is your retirement date. When will you starting your search for part time work. If moving, when do you put your house up for sale? All of the items listed in your retirement picture in step 1of the retirement planning checklist list by date to start and complete.
At this point, don't obsess about smaller issues that you can address once retired like tax and estate planning, selecting specific vacation destinations (unless you know them now), the investment choices for your portfolio. These can follow in the first few weeks after retirement.
Learn more, have a more comfortable retirement.
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