Retirement Planning

6 Planning Tips to Help Ensure a Comfortable Retirement

8 Minute Read

Retirement is the culmination of all your work, discipline and saving. So when it comes to planning for it, you need to get that right. Here are planning tips and bits of wisdom to help you ensure your retirement years will be everything you’ve envisioned.

1. Intensify your planning with a decade to go.

Whether you are a business owner or a busy executive, it’s easy to put off retirement planning. But if you wait until you are on retirement’s doorstep to step up your planning efforts, there’s no time for course corrections.

Most people should begin having more serious planning discussions with a financial advisor no later than 10 years from retirement. That’s a great time to review the state of your savings and debt, as well as your income and investments, and do some initial projections about the funds you’ll have for retirement.

Maybe your advisor will tell you that you’ve “won the game.” But you could also learn you are several touchdowns behind with a quarter to play. And that’s okay. At 10 years out, there is still time to make adjustments, whether that’s altering investment asset allocation, reducing spending or even changing your target retirement date.

“At a minimum, check in again with your advisor for a retirement planning review at five years out and then at 18-24 months,” recommends Daniel Babai, a senior financial advisor for UnionBanc Investment Services. “The five-year check-in allows you to confirm you are on track and make any final adjustments, and the 18-24 month review can focus on fine-tuning around important issues such as tax planning and — if you are a business owner — succession planning.”

2. Let your goals drive your planning.

Financial planning for retirement should start with establishing your goals. It’s those objectives that will drive later cash flow planning and budgeting efforts.

“You’ve probably heard many rules of thumb regarding retirement planning, one being that you will need 80% of your preretirement income after you stop working,” Babai says. “But there’s really only one rule of thumb that applies universally: Everyone’s situation is different.”

That’s because everyone has different retirement goals. For instance, you may have worked six-day weeks for 40 years running a business with few vacations, and your goal in retirement is to see the world. In contrast, another person might have traveled globally for years as a sales executive and has no interest in traveling in retirement. Just that one budget item will have a big impact on the amount of funds each retiree will need.

Goal-based planning should look at all the things you want to do and accomplish in retirement. It helps to put those goals into three categories:

Needs such as mortgage payments and health care

Wants such as travel or a new car every 10 years

Wishes such as paying for a grandchild’s education or buying a vacation home


3. Budget realistically and conservatively.

The next step is doing cash flow planning to help ensure you have the funds to cover the needs and wants, and hopefully some of the wishes. There are several keys to success here:

Don’t overlook or underestimate costs in retirement. One that often sneaks up on retirees is the true cost of health care, including paying Medicare deductions from Social Security and for Medicare supplement plans. Additionally, you need to plan for the very real possibility of long-term care costs.

Make conservative projections for investment income. In recent years, we’ve all come to almost expect double-digit performance from the stock market. But going forward, that’s not a given.

Be bullish on your life expectancy. A common budgeting mistake is assuming you won’t live past a certain age because of family history. But recent research suggests genetics may be less of a determinant of life span than previously believed.   Bottom line: You could live to 90, 100 or more, and you better prepare for that.

4. Debt can be a good thing.

“Another mistake many people make is planning to immediately pay off their home mortgage once they retire,” Babai says. “This can be a particularly egregious error in many places in California that have sky-high real estate values.”

One reason it can be a mistake is the opportunity cost. If you have a balance of several hundred thousand dollars remaining on a mortgage at 3% interest, and have the cash to pay it off, it might be savvier to invest that cash and earn at a significantly higher rate.

But just as importantly, using a large portion of your cash to pay off the mortgage — while it might feel good — could prematurely drain your nest egg. At some point in the near future, you could be left with too few funds and, because you no longer work, a reduced capacity to borrow.

5. It’s never too late to start.

Yes, starting retirement planning early is best. But it’s also true that it’s never too late to establish or revamp a plan. You might reach 55, see you’ve spent a lot of your wealth putting a couple kids through Ivy League schools, and decide it’s too late to turn around your retirement prospects.

But it’s not. There’s always time to get started on a new plan or re-evaluate your existing one. If you’ve invested too conservatively, for instance, you can improve your retirement outlook by altering your investment mix or allocation. In addition, IRA and 401(k) plan catch-up contributions can help accelerate your savings.

6. Lean on your advisor.

No matter your circumstances, your financial advisor is someone who can point the way.

Advisors have valuable experience and software tools to assist with financial modeling and projections at any point along your journey to retirement. They are equipped to help you make plan adjustments when major life events happen, and run any “what if” scenarios that are keeping you up at night.

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UnionBanc Investment Services is making this article available for general informational purposes only and does not purport it to be a complete analysis of the subject discussed. Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this article should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

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