Question: Stephen and Jenn in Springdale: What do you believe are the most important financial things to consider when planning for retirement?
A: We’re glad you’re asking this question because most people aren’t. In fact, according to a 2020 study by the TransAmerica Center for Retirement Studies, only 18% of current retirees have a retirement plan that’s actually written down. And 42% don’t have a retirement strategy, period.
What we’ve found over the years working with clients from all walks of life from throughout the Tri-State is that there are essentially seven major ‘decision points’ that need to be addressed when planning for your retirement:
- Retirement income needs (determining what income you’ll need to replace when you stop working)
- Expense and debt management (analyzing how to reduce debt loads prior to retirement)
- Tax planning (strategically planning the kinds of retirement accounts you use and also the timing of retirement withdrawals and the amounts)
- Investment management (maximizing the returns on your investments to create sufficient income to preserve your principal)
- Risk management (controlling or minimizing the impact of unforeseen events on your money)
- Estate and legacy planning (deciding in advance what will happen to your money and possessions when you’re gone)
- Distribution and income sources (analyzing the best sources from which to derive your income, and in what sequence)
Here’s the Simply Money Point: Preparing for retirement is something most people think about but many hesitate to actually begin. In our experience, the people who live well throughout their retirement usually do so because they took the initiative and worked with a trusted financial advisor adviser to create a personalized plan that comprehensively addresses these seven main areas.