Retirement Planning Checklist

Retirement Planning

If you decide to consult a financial advisor, the chances are quite high that the conversation will mostly cover topics relating to your current financial situation. They may ask you about your spending habits, the debts that you owe and your budgeting skills.

While these are important aspects that need to be discussed in order to lay the foundation that is necessary for financial planning, the conversation will eventually steer towards the more important question of how to make your retirement plan work.

It is a process of determining how ingeniously a person can come up with a retirement goal and how efficiently they can follow it year after year. It eventually comes down to five numbers and all one needs to do it is determine them by putting in some efforts.

A scratch pad and calculator are possibly the only things that you will need to carry out the calculations. You should do these things in the company of your partner or spouse who can help you exercise your memory and help you arrive at correct assumptions about your future as well as that of your family.

Getting Realistic about Goals

Most people have a number in their head about the age that they wish to retire at. But most often they end up pushing the target indefinitely because they are unable to meet their target goal. It may be due to degradation of health or the fact that their organisation is downsizing or maybe you changed your career at a later stage in life leading to an increase in income or a loss of it. You should rationally decide on a number and ensure that you save enough to meet your goal in a reasonable number of years.

Estimate your Retirement Income

You may have taken out insurance policies that will pay out a lump sum of money in retirement. These are sources of money that you can count on in retirement to help you set up your retirement fund. Making the right investments will help you generate steady income and further add to your retirement pot. Working part-time in retirement should also help you to increase your income.

Figure Out Expenses

Once you have a fair understanding of how much money you can save for your retirement, you should also calculate the expenses that you may have to incur in your retirement. Will you still be paying mortgage in your retirement?

How much does a will cost and how will you arrange travel, food, insurance and healthcare costs? The expenses that you initially calculate will be lower than the amount that you will actually spend and therefore it may be a good idea to cut costs from the very beginning.

Take the Unexpected into Account

Even the best laid plans sometimes meet with unexpected elements producing an outcome that you simply hadn’t anticipated. You should always take into consideration the possibility of things going wrong even if it is something as unpredictable as a storm wreaking havoc on your property. When you are living on a fixed income you may end up overspending in the first few years itself and this can drastically impact your ability to further add to your retirement fund later on.

Consider Longevity

According to your estimates, how long do you believe your retirement fund will last you? Have you taken into consideration the sweet possibility that you may live longer than you think you would? An aspect that you may have overlooked is inflation. It can severely affect your spending power and make it decline over the years. Creating a good investment portfolio can balance things out and offer you protection from long term problems.

Clear Debts Before Retirement

You should make it a point to clear your debts before you start your retirement. It is quite likely that your income will reduce in retirement and still having debt in those times will make it harder for you to lead the type of lifestyle that you had initially planned for.

Many people end up spending the lump sum of cash that they receive in retirement to clear debts such as loans or mortgage. This can bring down the worth of your retirement fund and you shouldn’t count on this lump sum of cash to clear your debts as it will ultimately increase the debt due to accumulation of interest.


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