4 minute read

Retirement Planning Checklist: How to Plan for the Future

Do you have questions about the retirement planning process? We put together this retirement planning checklist to help you get started!

There are many reasons people put off retirement planning: it can feel far away, life is too busy, and the process is often intimidating. While these challenges may be standing in your way right now, it is crucial to begin planning for retirement early. 

The following retirement planning checklist can help guide you through the process. We break it down into steps to help you begin thinking ahead, no matter what age you are. Read through the following checklist to start planning for retirement today: 

  • Set a budget and start saving

  • Invest in long-term growth

  • Review your insurance policies

  • Choose the right retirement plan

  • Maximize your benefit options

  • Keep up with your estate planning

Set a budget and start saving

The first item to think about when retirement planning is your future spending needs. Essentially you need to estimate how much income you think you will need in retirement. There are a few different ways to look at this. 

Many people start by taking an average of their current salary, as well as an average of their annual spending and expenses. With these numbers in mind, it's important to adjust to major life expenses. For example, do you plan on downsizing your home? Will you put a child through college in the future? Do you have any bucket list items you want to accomplish in retirement, such as a big trip? 

These are all important areas to think about before you start saving.  In retirement, you will likely have much more time for activities, travel, and more. It is also a good idea to consider future medical expenses and have funds set aside for unexpected costs. These can add up and will impact your overall funds. 

During this process, create a realistic savings goal for yourself. Remember, your savings amounts and future retirement expenses can always be changed. This point in the process will simply provide a starting point when thinking about the right investment opportunities. 

Invest in long-term growth

Retirement planning is all about long-term growth. Set aside funds as early as possible to watch them grow over time, choosing investments that will appreciate in value according to your overall goals. A few common examples include stocks, equities, mutual funds, and index funds. 

The performance of these investment types can vary greatly over time, but historically speaking they have proven to be sound options for long-term portfolio growth. “Long term” generally refers to periods of 10 or more years. If retirement is farther away, you will likely place the majority of your savings into long-term investments that will grow for multiple decades. 

For those who are closer to retirement, you will need to balance short and long-term growth. The above investments can help you do both as you plan for the years ahead. The average life expectancy is getting longer, making long-term growth even more important. 

Review your insurance policies

The retirement planning process involves reviewing possible life insurance policies. The purpose of this step is to cover end-of-life care and associated costs. Life insurance can be a source of guaranteed funds in the future, helping alleviate the need to budget for these expenses in your current retirement plan. 

Life insurance policies can also provide future financial support to a spouse or a financially dependent family member. This can help offset the loss in income, and reduce the financial hardship faced by loved ones. Review different providers and plans to find an option that fits your needs and budget. 

Choose the right retirement plan

Unfortunately, there is not one perfect blueprint for retirement. The right retirement plan varies from person to person and is dependent on a number of factors. There are, however, a few components to keep in mind as you embark on your planning efforts:

  • Timing: Many retirement plans work in phases, incorporating different goals and spending changes into your investment habits. Let’s say you want to stop working at 65, but you want to help put your grandchildren through college in your 70’s. By incorporating these expenses into your retirement, you can select investments with different maturity dates and allocate funds accordingly. 

  • Liquidity: As you review the timing of your ideal retirement, pay attention to the liquidity of each investment you add to your portfolio. While many retirement plans focus on long-term growth, you should not avoid short-term investments altogether. Liquidity can help ensure your portfolio can provide funds for unexpected costs. 

  • Rebalancing: A final component to help guide your planning is rebalancing. Nothing about a retirement plan should be permanent. Instead, you should rebalance your portfolio as different needs arise. The economy changes, families change, and spending habits change. Rebalance your portfolio to make sure your investments reflect your needs as they adapt over time. 

If you are just beginning the retirement planning process, know that the right strategy will depend on your age. Those who are nearing retirement may need to consider low-risk, liquid investments. If retirement is farther away, you have more time to set up long-term accounts and rebalance as markets change. No matter how old you are, there are financial decisions that can help make the right retirement plan for you. 

Maximize your benefit options

Social security benefits become available at age 62, but that does not mean this is the best time to apply for them. If you want to maximize your benefit options, consider planning to use your retirement savings before tapping into social security at a later age. 

The reason for this is that social security benefits will be reduced if you retire at a younger age. According to the Social Security Administration, benefits can be reduced by 30 percent for those retiring at 62, and spousal benefits can be reduced by 35 percent. 

With that being said, social security is there to help assist you in retirement. Depending on your circumstances, you may feel more comfortable utilizing these benefits as soon as you stop working. 

Medicare is another benefit available in retirement, starting at age 65. If you retire before this age, you will need to rely on a spouse’s coverage or private health care, both of which can have added costs. Further, many recipients of Medicare require additional coverage through Medigap or another form of insurance. Keep each of these benefits and costs in mind as you plan for retirement. 

Keep up with your estate planning

Estate planning is the process of thinking through how you want your assets and belongings handled after death, and creating the right legal documents to protect those wishes. This process can help ease the grieving process and reduce financial hardships for family members. 

The reason estate planning is incorporated into the retirement planning process is that it relates to your future financial situation, end-of-life plans, medical care, and your family legacy. As you plan ahead for retirement, these topics will inevitably come up -- but they don’t have to be scary. 

There are numerous estate planning documents that can help you plan appropriately for the future. After you get started, remember to regularly update your Estate Plan as you add investments, create new streams of income, and even grow your family.

All in all, retirement planning does not have to be as intimidating as it may seem. The above retirement planning checklist aims to walk you though key steps in the process. It will require you to think about the future, money, your family, and more. By taking the time to do this now, you can help set yourself up for success down the line. 

At Trust & Will, we’re here to help you keep things simple. You can create a fully customizable, state-specific Estate Plan from the comfort of your own home in just 20 minutes. Take our free quiz to see where you should get started, or compare our different estate planning options today!

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Trust & Will is an online service providing legal forms and information. We are not a law firm and we do not provide legal advice.


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