I love checklists. They get me through the week and help me stay focused. With everything going on in Washington designed to distract you, checklists can keep you on track.
When it comes to retirement, a checklist is the best way to tackle this difficult subject. It can also put things into perspective. Here's what you need to know:
1) Pick A Retirement Age. For many, this is the easiest part. You may be disabled or unable to work anymore. Or you may be getting a great package at a certain age like some folks I know.
The age you pick, though, should be matched to your retirement savings and Social Security benefits. You get the highest monthly payments from Social Security if you wait until 70.
At the very least, use Social Security payments as a baseline for your retirement income. Use their calculator to get an estimate.
2) Determine Your Retirement Lifestyle. Simply put, write down your estimated retirement expenses. How much will you need for basic bills such as housing, food and insurance? What will your out-of-pocket medical expenses be? How much will a supplemental insurance policy (Medigap) cost? What if you plan to travel?
You'll also still be paying taxes and will have miscellaneous expenses. The better your spending plan estimates, the more you can project your lifestyle expenses. Here's a handy worksheet.
3) What's Your Savings Plan? This is also a simple matter. If you can save at least 15% of your annual income, you'll probably be able to cover most of your retirement expenses.
How do you bump up your savings? Put your retirement contributions on automatic savings. Can can also boost your retirement kitty through health savings plans and Individual Retirement Accounts. Use a retirement calculator to see if you'll reach your savings goals.
4) Get Help If You Need It. I think most Americans say "I got this" when it comes to retirement planning. But things may change. You may lose a job or switch careers. Your health may force you into early retirement. You may get divorced.
The only way to plan for wild cards is to create secure plan in the first place that's build on solid savings and planning. There's no harm in asking for advice, but make sure you work with a "fiduciary adviser" who puts your interests first. Stock brokers and insurance agents are generally not retirement planners.
To locate a certified financial planner near you, search here.
These are the four major components of a retirement plan, but if you're hazy on tax or estate planning issues along the way, you'll need specialists to help you. Those are things you can't do yourself.
At its core, a retirement checklist can keep you on course, but keep in mind you'll need to be flexible. What if you have to work later? Being nimble while sticking to your goals will make this a smoother process.
