8 Items That Can Be Crucial For Your Retirement Planning Checklist

Imagine yourself on your last ride home from work on the day you retire. The cardboard box is in the backseat, and there’s no reason to wake up to an alarm clock tomorrow. There’s also no steady paycheck.

Is that fear or excitement fluttering in your stomach? It probably depends on whether you have a strong plan in place for income during your retirement years.

Having a retirement planning checklist can help make this final commute the time of reflection and joy it should be. While you simply can’t plan for everything, having the essentials in place can give you the confidence and clarity you need to enjoy the freedom retirement can provide.

Let’s look at eight important tasks for your retirement planning checklist that you can start on today—to help ensure tomorrow looks the way you envision it.

Visualizing Retirement

This might sound like the easiest part of the process, but that may depend on how realistic your dreams are and how good you are at visualizing what you really want life to look like. For many individuals approaching retirement, the question of what you are planning to do comes down to some common themes of: golf or pickleball, house projects, time with grandchildren, and travel. These are staples of retirement and are great things to do to when every day is a Saturday.

To help crystalize those plans in more detail try plotting your goals on a retirement timeline that segments your retirement into three sections: the Go-Go Years, Slow-Go Years, and the No-Go Years.

The Go-Go Years are when you’re most active and will likely spend the most money on trips, home improvements, and other large-ticket items. The Slow-Go Years may see reduced spending and perhaps more time at home with family visiting you. Finally, the No-Go Years are the latter years of your life that may include less activity and, perhaps, more time spent on health maintenance.

When you plot it on a timeline, it becomes evident how short retirement is—the limited period of time you have to do the things you want to do—and that can focus your efforts on being intentional about how you want to spend your time. 

Have a Financial Game Plan

The importance of a plan cannot be emphasized enough. Do you know how you will take money from your 401(k) or IRA, how you will take Social Security, how to be tax-smart with your income planning? With so many details, the first step is to meet with your advisor to better understand what needs to be included in your plan and which decisions need to be made.

As part of your plan, you should create a budget. The budget will help you understand how much income you need in retirement. You don’t have to go down to the penny (that will drive you crazy), but you can put some guardrails in place to help you stay on track.

You’re going to have more free time than you’ve had since you were a teenager, and you may have more money than your teenaged self ever dreamed of. Developing financial discipline early on in retirement will be beneficial for the long haul.

If you’re within 10 years of retirement, consider a practice period of living within your planned retirement means. For instance, if you’re planning to live on $40,000 a year after you retire, see what it’s like to live on that budget for six months. You’ll get a pretty good idea of what challenges could lie ahead.

Have Your Healthcare and Long-term Care Insurance in Place

According to Fidelity’s annual Retiree Health Care Cost Estimate, the average 65-year-old couple will need about $300,000 to cover healthcare costs throughout retirement. And that doesn’t include long-term care, which nearly 70% of all people who live to age 65 will need.

These expenses are too great for the average person to absorb. Rather than potentially transferring these costs to your kids (and grandkids), you may want to consider one of the different long-term care solutions that exist in the marketplace today. Your advisor can help you decide which solution provides the most protection for you based on your income and assets.

Be Smart About Your Social Security

Depending your other sources of income and your expected income need, Social Security can be a significant income source for you in retirement. For many retirees it provides a significant portion of their retirement income. So, taking Social Security at the right time and in the right way is crucial to your overall financial plan. The wrong approach could cost you thousands in benefits over the years.

Manage Portfolio Risk

Experiencing a significant drop in your portfolio value (25–30% or more) at the beginning of your retirement can have adverse consequences on your ability to fund your retirement income needs throughout retirement. This is called “sequence of return” risk. You should work with your advisor to ensure that your portfolio is designed to address this risk and others that are relevant to your plan and your risk profile. Managing risk should be based on analysis and long-term planning for a successful retirement.

Be Proactive with Taxes

You can’t stop taxes, but you can be smart about them. In your retirement years, this is especially important as the tax landscape will most likely change for you.

You’ll be taking withdrawals from accounts, and you need to know the income tax implications there. Whether we’re talking about required minimum distributions or Social Security benefits, the right approach can help to keep you from paying unnecessary taxes.

Diversify Your Income Plan

Retirement isn’t just about the money you have saved. It’s also how you plan your retirement income. Tax-smart, strategic planning that includes 401(k), IRA, and Social Security gives you a better approach than simply trying to avoid spending money.

Diversifying through alternate investments, real estate, etc. can also provide you with other streams of income. But work closely with your advisor, as the tax implications may be even more complex.

Update Your Legal Documents

Make sure your documents are up to date—not just once, but in a cadence of every four or five years. The size of your estate, the makeup of your family, and laws can all change over time. Regularly reviewing legal documents can help you keep everything in line with your current situation.

After all, you probably don’t want your ex-son-in-law to inherit part of your estate, and you can’t have a deceased relative making decisions as your executor.

These Years Are Golden

Retirement is a time for reflecting on life and deepening your most important relationships. Free yourself up in those days by working with a retirement planning checklist to prepare, strategize, and invest.

Talk with your advisor today about a plan that works for you, because wasted energy and time in these years aren’t losses you can easily recoup.

This piece is not intended to provide specific legal, tax, or other professional advice. For a comprehensive review of your personal situation, always consult with a tax or legal advisor.

Tom Fridrich is a non-registered associate of Cetera Advisor Networks LLC, Member FINRA/SIPC.

Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.

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