This post was last updated on January 18, 2024, to reflect all updated information and best serve your needs.
Proper planning is crucial to ensure a smooth transition into a fulfilling retirement lifestyle. However, it can be really intimidating when you first get started. You aren’t the first person to retire, so you can draw on the experience of others who’ve walked this path.
At NextGen Wealth, we walk our clients through our comprehensive COLLAB Financial Planning Process™ to ensure we cover all bases. We’ve had hundreds of conversations helping people navigate these tough decisions. Here are the top 7 things we think you should consider when planning for retirement:
- Financial Stability
- Healthcare
- Lifestyle Design
- Legacy and Estate Planning
- Social Security and Pension Optimization
- Debt Management
- Emotional and Mental Well-being
We’ll walk through the highlights of each one to help you start thinking through these things.
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1. Financial Stability
This may seem obvious, but if your finances aren’t stable, it’s pretty hard to have a smooth retirement. You’ll need to calculate how much income you’ll need in retirement. You’ll also need a plan to transition from the accumulation phase to the retirement or decumulation phase.
You’ll need to figure out how to convert your savings and investments into a regular income stream. With changes in tax law, bumpy market conditions, and inflation threatening your nest egg, you have to be ready.
Cash Flow and Budgeting
Budgeting doesn’t have to be restrictive. At NextGen Wealth, we understand you’re going to have some big expenses pop up from time to time. You may also have some years where you’ll be spending a lot less.
We help clients design a cash flow plan to allow lots of flexibility – without running you out of money. You’ll want to create a realistic plan to account for essential living expenses and fun activities. Having a clear financial plan will help you maintain stability throughout retirement.
2. Healthcare
Healthcare is a major expense which directly affects how enjoyable your retirement is. Having affordable access to healthcare is absolutely essential. Whether you have insurance through your employer or rely on Medicare, there’s plenty to consider.
There are also lots of important milestones to be aware of as well. Be sure to evaluate all your health insurance options, including Medicare, supplemental plans, and any employer-provided coverage. Anticipate future healthcare needs and costs to avoid unexpected costs.
General Wellness and Health
It’s very important to maintain a healthy lifestyle. Regular exercise, a balanced diet, and preventive healthcare measures can help you live a more active, happier retirement. Just make sure you’re staying on top of your health.
3. Lifestyle Design
One of the most important things we discuss with clients is what they’re retiring to. Sometimes we can get focused on what we’re leaving (our job) and forget to design the life we really want to live instead. This looks different for everyone.
In fact, you may even decide retirement (at least in the traditional sense) isn’t right for you at all. Consider what your ideal retirement looks like. Whether it's traveling, pursuing hobbies, or spending time with family, having a clear vision will help guide your financial and lifestyle decisions.
Housing and Location
You may want to assess your living situation. Determine if your current home meets your needs or if downsizing or relocating is a better fit for your retirement lifestyle. We think Kansas City offers a large variety of lifestyle options, so you might not need to move far – or at all.
4. Legacy and Estate Planning
Although talking about the “end of your plan” isn’t fun, it’s very necessary. This isn’t just about setting up simple wills and trusts either. It’s best to think in terms of what legacy you want to leave behind and then create a plan to make it happen.
We can help set things up or coordinate the proper referrals. However, only you can decide what’s best for your family. There’s also a considerable amount of tax planning which comes into play as well.
Establish or update your will and any necessary trusts to ensure your assets are distributed according to your wishes. At a minimum, you can start by selecting a Transfer-on-Death (TOD) or Payable-on-Death (POD) designation for all accounts and titles as necessary.
5. Social Security and Pension Optimization
We spend a lot of time optimizing Social Security withdrawal strategies. This can be even more important if you’re planning Social Security in concert with a pension. Things can get complicated pretty quickly.
Understanding the optimal time to claim Social Security benefits based on your financial situation can be very powerful. It’s important to coordinate Social Security with tax-saving strategies as well. For instance, Roth conversions can be planned around Social Security or vice versa.
Pension Options
If you’re planning to receive a pension, carefully examine the different pension payout options. Choose the one which best aligns with your financial goals and estate plans. Also, it’s important to understand how current conditions may affect your pension.
Regardless, it’s very important you get these long-term income options right. Your Social Security and pension play a significant role in your financial future.
Hoping to retire in the next 5 years or less? Download our 3 Pillars of Successful Retirement Plans.
6. Debt Management
If you’re carrying a large amount of high-interest debt into retirement, this could spell trouble. It’s still possible to retire with debt, but those payments continue regardless of what the markets do.
Aim to enter retirement with little to no high-interest debt. This allows you to stretch your retirement income further. Otherwise, your portfolio might become a little stressed.
It’s also a good idea to continue to maintain good credit. Good credit can help you access credit lines or loans during retirement if needed. It’s not uncommon for retirees to still be finishing paying off their house, but it’s a good goal to have manageable payments.
7. Emotional and Mental Well-being
The importance of mental and emotional well-being can’t be overstated. It’s best to stay engaged with family and community around you. In Clint’s book, Retirement the Right Way, this is a major theme woven throughout. A lot of what makes you successful in retirement is about how you define success for yourself. This probably has a lot less to do about money and a lot more to do with your happiness and fulfillment.
Make sure to continue planning activities to keep you mentally and emotionally engaged. Whether it's volunteering, joining clubs, or pursuing educational interests, staying active contributes to a fulfilling retirement. Having a game plan for combatting and reducing stress is very important.
Social Connections
Cultivate and strengthen social connections. A robust social network provides emotional support and adds joy to your retirement years.
Wrapping Up
Overall, you just need to start making some plans to ensure you’re covered in retirement. By addressing these key areas, you can improve your overall retirement experience. Even just a little bit of planning can go a long way.
If you’re looking for some expert guidance and expertise, contact NextGen Wealth today to get your free assessment. We’re ready to help you navigate this significant life transition with confidence and peace of mind.