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4: Make a Plan

What Steps Do You Need to Take for an Optimal Retirement?

Depending on your age and life circumstances, your retirement preparations will vary. It is likely that you will need to work on several of eight key retirement planning areas at once and this can get overwhelming. The good news is, realistic retirement preparations are within your reach. In this section, we will review some actions you can take no matter what groundwork you have in place.

retirement planning

Review Action Items for Each Life Stage

Use this grid to help you identify areas of your retirement planning that need work. Later, you will use this to set attainable goals in that area of focus.

  • Life Stage: Retirement is Far Off (20 - 34 years old)
    Action Items:
    • Pay attention to how work history will impact your Social Security benefits.
    • Monitor your Social Security records.
  • Life Stage: Retirement is Within Sight (35 – 49 years old)
    Action Items:
    • Pay attention to career interruptions and how this can impact Social Security benefits and retirement savings contributions.
  • Life Stage: I’m Closing In (50 or older)
    Action Items:
    • Determine your optimal age to begin receiving Social Security benefits, aiming to optimize benefits.
  • Life Stage: Retirement is Far Off (20 - 34 years old)
    Action Items:
    • Aim to work until full retirement age.
  • Life Stage: Retirement is Within Sight (35 – 49 years old)
    Action Items:
    • Keep work skills and professional network up to date to navigate any change in work status, aiming to retain or improve income status.
    • Outline fallback plans if circumstances trigger a need to fill an income and/or insurance benefit gap.
  • Life Stage: I’m Closing In (50 or older)
    Action Items:
    • Determine your optimal employment situation in preretirement and retirement with fallback options to fill income and insurance coverage gaps.
    • Plan how to phase out of employment or reduce work hours leading into retirement.
  • Life Stage: Retirement is Far Off (20 - 34 years old)
    Action Items:
    • Investigate disability and long-term care options before you need them. Medical issues and disabilities can happen at any age.
  • Life Stage: Retirement is Within Sight (35 – 49 years old)
    Action Items:
    • Pay attention to health issues and take up healthy actions like screening exams, annual physicals, diet and exercise modifications.
  • Life Stage: I’m Closing In (50 or older)
    Action Items:
    • Lay out a strategy for insurance coverage and savings to cover medical and long-term care expenditures to minimize out-of-pocket financial obligations during retirement.
    • Outline fallback plans if health care costs exceed expectations or insurance coverage is reduced.
  • Life Stage: Retirement is Far Off (20 - 34 years old)
    Action Items:
    • Start retirement saving and investing sooner rather than later to take advantage of the potential for long-term investment returns.
    • Seek qualified professional advice to help with planning.
  • Life Stage: Retirement is Within Sight (35 – 49 years old)
    Action Items:
    • Adjust investment strategies based on risk tolerance and life circumstances.
  • Life Stage: I’m Closing In (50 or older)
    Action Items:
    • Apply an intentional strategy to manage retirement plan assets long-term, especially leading into retirement.
    • Determine viable options to build and catch up on retirement plan assets.
    • Outline intentional actions to draw money from retirement plan assets.
  • Life Stage: Retirement is Far Off (20 - 34 years old)
    Action Items:
    • Be intentional about how money is invested in retirement plans (employer-sponsored, myRA, IRAs) for the long-term.
    • Aim to exceed the inflation rate, manage risk through diversification, automate the process and routinely monitor progress.
    • Take advantage of employer matching for retirement fund contributions.
    • Revisit your plan to make adjustments when transitioning into your next life phase.
  • Life Stage: Retirement is Within Sight (35 – 49 years old)
    Action Items:
    • Strive to maximize contributions to retirement funds, using catch-up strategies as much as possible.
    • Predetermine how to deal with any retirement plan asset transfer decisions, such as rollover or severance package payouts.
  • Life Stage: I’m Closing In (50 or older)
    Action Items:
    • Utilize investments to draw income throughout retirement.
    • Outline an intentional sequence to draw down assets during retirement.
  • Life Stage: Retirement is Far Off (20 - 34 years old)
    Action Items:
    • Continue paying your mortgage, reaping benefits from building equity.
  • Life Stage: Retirement is Within Sight (35 – 49 years old)
    Action Items:
    • Aim to pay off your mortgage before you retire.
  • Life Stage: I’m Closing In (50 or older)
    Action Items:
    • Outline a housing strategy to make use of your home’s equity as a source of income during retirement.
  • Life Stage: Retirement is Far Off (20 - 34 years old)
    Action Items:
    • Spend less than you earn.
    • Monitor your credit report annually.
  • Life Stage: Retirement is Within Sight (35 – 49 years old)
    Action Items:
    • Strive to manage your debt load to live within your means, aiming to reduce your debt load before retirement.
  • Life Stage: I’m Closing In (50 or older)
    Action Items:
    • Minimize consumer debt prior to and during retirement.
  • Life Stage: Retirement is Far Off (20 - 34 years old)
    Action Items:
    • Look out for your own interests first by setting your retirement plan as the higher priority.
    • Protect your retirement savings from being used for other expenditures or other people’s costs.
  • Life Stage: Retirement is Within Sight (35 – 49 years old)
    Action Items:
    • Pay attention to how extended family financial needs impact your own retirement savings plan.
    • Be diligent about sticking to retirement savings goals.
  • Life Stage: I’m Closing In (50 or older)
    Action Items:
    • Guard against fraud.
    • Implement checks and balances measures for decision making.
    • Form a Trusted Team to aid in decision making, monitoring, and interventions.

Identify Your Next Steps

Using the list, identify your life stage and look through the eight key decision areas for retirement planning. What are three areas you can focus on for the time being? Further, what are actions within those areas that you can identify as short term, mid term, and long term? Can you set goals for these actions so you can measure your progress?

For example, suppose you are single and 54. Your ideal retirement is traveling with family in your retirement. Will you have enough put away in your work retirement plan to pay for your family to travel every three years? What insurance options will you use for your health needs? How long will you need to work to maximize your Social Security benefits? Will you need to work in retirement?

  • In the short term, you may need to speak with your employer or human resources office to find out more about your retirement plan, catch-up contributions and matching contributions. You also can figure out your Social Security benefits at your full retirement age to find out if you may need to supplement your income.
  • In the mid term, additional contributions to an IRA or myRA could make sense to boost your retirement savings. Looking into different Medicare options that will be available to you in retirement is a good idea so you can begin to understand these plans.
  • In the long term, you might make plans with your family about who can help you with these travel plans and keep your working skills updated.

As you move along in time, make sure you keep track of your progress. Some actions will produce tangible evidence such as a new IRA. Other actions, like conversations with adult children concerning your retirement desires, will be less easily monitored. But keep track anyhow so that you can begin checking items off for yourself.

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