Retirement Financial Planning Checklist
Updated for October, 2021
Getting ready for retirement? Planning for a financially secure retirement can be overwhelming and confusing. Making sure you’ve got the right things in place and preparing ahead of time for a secure retirement can save you from unexpected disappointments and unpleasant surprises. If you’re getting started or just want to confirm if you’re on track with your financial retirement plan, we’ve pulled together handy Retirement Financial Planning checklists to help you better prepare and be ready for your retirement.
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Check Your Retirement Income Sources
Determine Your Retirement Expenses
Medicare kicks in at age 65, but you can count on it only covering approximately half of your total health care expenses.
Now that you’ve checked and calculated your estimated retirement income you can move on to the next important item, expenses. How much you need is based on what you’ll be spending and you can see how well your estimated retirement income accommodates that. This way you’ll be able to check if you fall short and make any adjustments to your retirement planning goals. Make it a habit to re-do this year before your retirement kicks-in of staying realistic about your budget. Here are the typical things to consider when calculating a retirement budget.
What to Consider for Retirement Financial Planning
Are you renting or do you still have a mortgage? Your retirement plan should include paying off your mortgage as much as possible before retirement. Ideally, you should be mortgage-free before you retire to reduce the financial strain on your retirement budget.
Credit Card Debt and Loans
Again, make it a goal to start retirement debt-free. Your retirement plan should focus on eliminating debt before your retirement begins.
Include property taxes and estimated yearly income taxes.
Medicare kicks in at age 65, but you can count on it only covering approximately half of your total health care expenses. It’s estimated that you can spend between 11% and 16% of your after-tax retirement income on expected health care expenses. It’s important to have the proper medical health coverage in place during retirement to avoid having medical debt. Look into getting some additional medical insurance coverage to keep you better covered and include this in your retirement budget. Include out-of-pocket costs such as any dental, vision, and prescription drugs. There are tools such as One-Click Health Estimator on the Health View Services website to help you calculate your future retirement health-care expenses.
Include all the different types you will have such as home insurance, property insurance, life insurance, long-term care, vehicle insurance, travel insurance, etc. (except health insurance if you’ve counted under health expenses).
Include your utilities, (phone, cell phone, Internet, cable, heating, telephone, water, electricity bills as a guide to estimate) maintenance, clothing, and accessories, groceries, transportation. Collect and review your receipts and statements from the last few months to give you an idea of your average living expense amounts.
During your retirement, you’ll have more time to dedicate to your favorite pastimes, hobbies and recreational activities. Include what you expect to spend on fitness, travel, hobbies, pets, dining out, subscriptions and anything else you can think of. Include a gift-giving amount (don’t forget to include any new grand-kids down the road).
Setting a Retirement Date
If you are not in the best financial shape, you might want to consider pushing forward your retirement date a few years and keep working (even part-time) to reduce any existing debt and increase your savings.
After going through the above checkpoints, you should have a better idea if you are ready to retire. Knowing when it’s the right time to retire can depend on a few things such as the following:
Do You Have Enough Saved for Retirement?
You’ve calculated your retirement income sources, applicable taxes, and a retirement budget. So, what’s the verdict? Do you think your nest egg is sufficient? If you are not in the best financial shape, you might want to consider pushing forward your retirement date a few years and keep working (even part-time) to reduce any existing debt and increase your savings. This is where a financial advisor can help you weigh the pros and cons of retiring later, delay taking some retirement income such as Social Assistance and re-allocating your savings into more profitable retirement investments.
Are You Ready Emotionally to Stop Working?
For some people, their work and personal identity are very closely connected. If your closest friends are your work colleagues, you may want to continue working for a few more years or scale back and work part-time if possible to ease into a new retirement lifestyle. Having some extra free time while still working can give you the chance to get involved with other people and activities outside of work. This will help you build up your retirement network of friends.
Time for Your Significant Other
If you and your partner plan to retire at different times there may be the need to adjust your daily schedules and domestic responsibilities. If one is still working, they may not be available to do all the things together. It’s important to have a plan that works for both of you. That may even include the delay of full-retirement for one spouse until the other is ready to retire. Whatever you decide to look at what you’d like to do during retirement and the goals you have each or together as a couple.
Your Retirement Wish List
For many people, their goals for retirement include more than just gardening, golf, and travel. Some decide to pursue lifelong dreams and projects such as starting their own business, writing a book, starting a charitable organization or just following their passion. If you have clear goals and a strong motivation for your retirement lifestyle that includes meaningful activities and projects, should help guide you in picking the right time to kick-off your retirement.