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  • Writer's pictureBrendan Moody

10 Things to Consider in Retirement Planning

The most important factors that come together to shape every effective retirement plan

An elderly couple taking notes

A life decision that's more important than working/getting a job as an adult is planning for retirement––a time when employment wages cease to come. Even an abundance of funds could diminish to a trickle if not properly planned for in this period. 

Adequate retirement planning is the only way to ensure a desired quality of life, a consistent flow of funds, and an aversion to a burden of debt left to one’s loved ones after one’s death. Below are the ten most important things to consider when making a comprehensive retirement plan.

Conduct a personal financial review 

First things first, a personal evaluation will help clarify your current financial situation, because the first ingredient for effective retirement planning is being as realistic as possible. A personal evaluation lends a clear understanding of what’s possible and helps set realistic targets for the plan. 

An important determinant for the type of planning you require is what stage you are in your career and in life. However, there are a few things that are important regardless of what stage you’re in with work and life, and this includes things like your debts and how you are managing them, your expenses and what they entail, and your savings and investment status. 

Conducting a financial review is a smart exercise to identify life changes that help increase the ceiling on your realistic retirement targets––especially if you’re still a few years away from retiring.

Identify your financial time horizons 

young woman and old woman laughing together

Your age and expected retirement age are the time borders for you to build an effective retirement plan. 

This isn’t only because the two ages help you to get a clear picture of what your plan should be like, and what life changes may help to improve your plan, but also because the ages in question are huge determinants regarding how much risk your financial portfolio can withstand.

Consider your risk tolerance 

Your risk tolerance diminishes the closer you get to retirement, meaning that ideally, it’s not recommended to have most of your assets in riskier investments—like stocks—unless there’s still ample time until retirement. 

As you get closer to retirement, the goal should be the preservation of your capital—meaning you should focus on less risky securities like bonds. They don't typically yield stock-like returns, but they will ensure a steady flow of income with less worry about inflation and other microeconomic factors.

Calculate your estimated expenses 

Another item to consider in retirement planning is the spending needs you're planning toward. You need to be as realistic as possible with your projections, as assumptions that have no concrete basis can become an Achilles' heel for your plan. 

Some of the things that can have a significant effect on post-retirement spending include debts—for example, if the mortgage hasn't been fully paid off yet, alongside miscellaneous costs like medical expenses. The goal should be to outlive your portfolio. This is possible if you’re realistic with your estimated expenses, leave room for unforeseen circumstances, and stay as disciplined with withdrawals as possible. 

Plan around your projected lifestyle 

Older couple doing yoga on a lake dock

What better time to tick off most—if not all—of the fantasy holidays that you’ve crammed into your bucket list over the years than after you retire? You wouldn't be working anyway, so ticking off those holidays would be a great use of your time. You could also spend your time in other ways, like engaging in a hobby or diving headfirst into a new venture. 

Whatever those projected lifestyles are, make sure to highlight them in your retirement planning so adequate provisions can be made for them. Even the most extravagant dreams can be accommodated in your plan, but that’s only if they are put forward from the start and not shoved in midway. 

Be clear on your after-tax returns/assets 

This should follow after you’ve determined your time horizons and concluded on estimated post-retirement expenses. The aim is to help you get a reality check on how feasibly your portfolio matches the income you need. Your portfolio can include all possible income sources such as personal savings, pension pots, investment portfolios, and home equity. 

Investment returns are typically taxed, so an after-tax real rate of return is necessary. People often make the common mistake of calculating with an unrealistic rate of return, not factoring in the diminishing return threshold that comes with fixed-income securities that have low yields. 

Generally, you should calculate with a realistic expected return. This is just as crucial as knowing your tax status for when you start withdrawing from the retirement portfolio. 

Don’t leave out healthcare and miscellaneous costs

Retirement planning is only effective when you plan for the unexpected as much as you plan for the expected. A good plan is one that makes contingencies for unforeseen circumstances such as ill health, especially because this is synonymous with old age, in which most people spend their retirement period. 

Failure to make such contingency plans can see your portfolio burned through in the event of a medical emergency, putting the entire retirement plan in disarray and throwing a cloud of confusion on the way forward afterward. 

Another key point is ascertaining if you will be covered under any retiree health and welfare plan, especially if your employer has one, and if so, finding out how the medical coverage involved integrates with Medicare. These facts will help you gain some clarity on how to design the contingency aspect within your general retirement plan. 

Factor in other related parties 

family hug in the kitchen

A good retirement plan isn't complete without factoring in your family, friends, and other loved ones, and this doesn't necessarily mean making provisions for them within your plan. 

For many, retiring means that they ‌get to spend more time with their loved ones, be it remotely or going on trips together. Some of these loved ones may include a spouse, children, and grandchildren who require gifts from time to time. There could also be other relationships that you would like to grow and maintain, such as with friends or former colleagues. 

Some of these life plans can require money. Bearing all of them in mind will help you determine if there should be provisions made in your plan or not. 

Tie it all into your estate planning 

You’re finally getting to the point of solidifying all the key elements as you plan for your future. This is where you begin to look at engaging professionals for different aspects of the plan—CPAs, lawyers, accountants, insurance brokers, etc. You want to make sure that every angle is covered, including tax planning and the security of quality life insurance coverage to cap it all up. 

Ticking all these boxes will ensure that your assets are managed effectively. It will also help minimize the possibility of passing on undue financial burdens to your loved ones after you are gone. Estate planning also entails a decision on what to do with your assets afterward, be it to leave them to charity or to let your loved ones have them. 

The biggest factor in estate planning, however, is who you assign the charge to. 

Appoint a competent wealth manager 

There’s no better way to plan your estate than to work with a dedicated wealth manager who can take charge of all aspects and save you from the rigors of having to deal with numerous vendors—CPAs, lawyers, accountants, insurance brokers, etc.—all at once. 

An even better pick is a wealth manager who speaks in a clear and concise manner devoid of the usual professional gibberish that keeps people confused about what financial decisions are being made on their behalf. More specifically, a wealth manager who: 

  • Listens to understand you

  • Acts in your best interest––and your best interest only

  • Has a proven record of high-impact results from optimizing both its clients’ portfolio and their experience

  • Someone who generates value beyond investing

…and that’s just the tip of the iceberg.

How to make these ten action-points work well together 

The effectiveness of retirement planning is largely dependent on the competence of the wealth manager you put in charge of it. There are so many wealth managers out there, but only a few fit the description given above. 

You must be very intentional when choosing a wealth manager, as this is not a decision that you can afford to get wrong by any means.


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