Creating a Fearless Financial Plan for Retirement

Many couples know how challenging retirement planning can be. Some partners disengage, unwilling to even address the topic.  Or the discussion begins with the best of intentions but, for a variety of reasons, deteriorates into conflict around other money issues. Others have never taken the time talk about their retirement because they have just been too busy with work and raising a family.

As an experienced financial advisor, I find that many couples end up in their mid-50s never having had a full discussion of their retirement plans. The most important reason they avoid these discussion is that they don’t have the necessary fact-based information to develop a retirement plan they can achieve together.

To respond to this common challenge, we created the Fearless Financial Plan for Retirement Checklist. This pre-retirement checklist is designed to reduce the angst many feel in approaching the topic of retirement planning. It includes categories of items to consider and action steps you can take in the years leading up to retirement. Some of the analysis required is more complicated such as tax and investment planning, projecting future health care costs, or Social Security claiming strategies. Even so, by working through this checklist, you’ll gain a better understanding about what you can do on your own and where you may need to get additional help.

Whether you’re part of a couple or planning for retirement as a single person, use this checklist and these tips to get started.

Time is running out so start planning now

According to a bi-ennial Fidelity Couples Study, nearly half of couples polled indicated they have “no idea” how much they need to save to maintain their current lifestyle in retirement.  Similarly, 47 percent are in disagreement about the amount needed.  The degree of disagreement about how much is needed is highest amongst Baby Boomers (those born between 1946 and 1964).

Perhaps one of the reasons is that many financially successful Boomers self-manage their way to middle age.  By that time, however, retirement is fast approaching making the stakes higher.  So, if this sounds like you, it’s time to get serious about retirement.  You simply don’t have time to recover from mistakes or big market swings which can occur at any time.

Checklist Item –  Put structure around your goals: As with any goal-setting process, writing down your goals is an important first step in planning for the future.  We suggest that before you dive into the detailed numbers, you articulate your vision for retirement.  If you’re in a partnership, take time to come to agreement on a shared vision of your retirement life.  Consider questions such as – where will we live? How will we spend our free time?  Will we work part-time? and other lifestyle questions.  If you face some challenges in having this discussion on your own, a good financial advisor can usually help create a neutral place to talk about differences so you can agree on how to move forward.

Replace fear and avoidance with facts

Once you have clarity and agreement on your goals, the next step is to prepare a written financial plan that reflects where you are today and what you need to fund your vision.  If you don’t have a plan, you’re just throwing darts hoping you’ll hit the bullseye. Without a plan, you’re also more prone to worrying about whether you’ll run out of money.  That is a very real fear, no matter your level of wealth.  In fact, even families with high net worths are at risk of running short.  They become accustomed to an expensive lifestyle built during high earning years, but may be unsustainable once the earned income spigot is turned off in retirement.

Checklist Item –  Make a Plan:The simplest way to address the fear is to create a financial plan.  That plan should reflect realistic future goals and the saving and investment strategies required to achieve those goals.  Your plan should include development of a current Net Worth Statement that lists all your accounts so that you can see your total financial picture and how everything fits together to quantify your total wealth.  You’ll also need to establish annual savings goals and longer range retirement income projections.  Another helpful step is to track your current spending for a period of time (6 months – 1 year) so that you have clarity on exactly how much you’re spending and which expenses will continue during your retirement years.

Protect what you have

Preparing for the unexpected is part of reducing the risk that your plans are derailed by unfortunate life events.  It’s important to have discussions about how your health could impact retirement plans either by forcing early retirement or by using up assets earmarked for retirement income.  You’ll also want to create key estate planning documents to protect loved ones in the case of an untimely death.  Be sure to include the creation of a will, durable general power of attorney and a health care proxy in your estate planning.

Checklist item – Stress test your plan:Once you’ve created your retirement plan, stress test it for a variety of “what if” scenarios. For example, consider the impact of a forced early retirement from your work, lower investment returns, having to financially support a child or other family member, or how the untimely death of you or your partner would impact your plan.  Scenario analysis may provide important insight on areas of greatest risk and could help identify where it may be prudent to share the risk through life or long-term care insurance.  These insurances may serve to protect assets you have earmarked for retirement so that they are available when needed to support you in old age.

Sharpen the pencil

These tips are meant to be completed if you’re five or more years away from retirement.  Once you’ve reached your mid-60s or are within one year of retirement,  it’s time to create a more exact estimate of your retirement income.  Start by obtaining your Social Security benefits statement from  You can also request estimates from employers if you have pension benefits or other retirement benefits you receive from your employer.

Checklist item – Assess retirement health coverage needs and review Medicare options  

Often one of the largest expenses in retirement is health insurance.  At retirement, you typically make important decisions about coverage.  That includes what coverage you’ll utilize after leaving an employer-provided health plan, as well as assessing the many options and elections that you need to make associated with Medicare coverage.  In cases where you have pre-existing conditions, assessing the options and making a decision can be more complicated.  We’re finding that potential changes in the US healthcare system at large make this category of planning difficult to complete until you are very close to your retirement date.  Another complication a couple faces is when they have utilized employer-provided coverage for the entire family.  If the employee retires and the spouse is younger in age, filling the gap until Medicare becomes available can add unexpected costs to the retirement spending budget.

Refine your habits

We cannot overemphasize the necessity of preparing retirement well before your last day of work. The key to creating a fearless financial plan for retirement is having a clear picture of where you are now and a roadmap to get to where you want to be.

As our Pre-Retirement Checklist emphasizes, retirement preparation requires understanding both “the what” and “the how” of creating your retirement lifestyle.  If you begin planning well in advance, you are more likely to successfully balance the challenge of sacrificing the things you enjoy in your current lifestyle to support your future financial security.  That’s one of the best ways to bridge the gap from your retirement dreams to reality.