Financial Planning

Your Retirement Alarm Clock Is Ticking: Do You Have a Plan?

Get ready by covering these three important retirement planning bases, because those bells will be ringing soon enough.

Remember when employers used to hand out gold watches and generous pensions to workers when they retired?

Those traditions are fading fast. People rarely wear watches anymore, for one thing. Employees are less likely to stick with one company for their entire career, for another. And fewer and fewer companies offer defined-benefit plans, even to longtime, loyal employees.

Still, it might make sense to revive the timepiece tradition with one major metaphorical modification: A clock could be delivered before workers’ paychecks stop – you know, as a little reminder that time is ticking and it might be wise to put a detailed financial plan in place prior to facing 20 to 30 years in retirement.

Americans are living longer. According to the Social Security Administration, a man reaching age 65 today can expect to live to age 84. A woman turning 65 today can expect to live to age 86.5. And those are just averages. About one in three 65-year-olds will live past 90, and one in seven will live past 95.

A written plan would help them mentally prepare for what’s to come and hold them accountable for their financial decisions.

Would the countdown clock idea work? I don’t know. But I worry about some of the pre-retirees I meet. The investors who admit they chew their nails as they watch the market — but don’t have a plan. The savers who regularly stash money in various accounts — but don’t have a plan. The people who tell me they don’t need much — they just want to leave some money for their kids — but don’t have a plan.

If you’re nearing retirement, it’s time to make the most comprehensive plan you’ve ever had in your life. You can create your own or work with a trusted financial professional who can help guide you to your goals. Either way, here are three things to keep in mind as you go:

Preservation vs. accumulation

For most of your working years, your goal probably has been to accumulate as much money as possible — and investing a large portion of your portfolio in the stock market can be a good way to help build wealth. But when you’re near or in retirement, and you have less time to recover from a big market loss, you’ll likely want to reduce your exposure to risk. If the market corrects — or worse — and you’re forced to sell your investments regardless of the price per share in order to fund your retirement lifestyle, the consequences could be devastating. This is called “reverse dollar cost averaging” or “sequence of returns risk,” and a worker’s financial position can vary dramatically depending on what happens in the markets just as he or she retires.

If you’ve won the game and saved enough money for retirement, why put it all at risk? As you develop your plan, be clear about how much you’ll need to achieve your short- and long-term goals — and what you are (and aren’t) willing to risk in order to achieve those goals.

Retirement plan vs. retirement portfolio

Most people go into retirement with a 401(k) or traditional IRA, and maybe some kind of brokerage, savings or Roth account, an annuity or real estate investments. And that’s all great. But a drawer full of paperwork isn’t a comprehensive plan. I often compare it to an orchestra that’s tuning up before a concert: The instruments are all there, but it’s just noise until the conductor takes the podium and indicates the right tempo. Your written plan should tell you which accounts — 401(k), Roth, savings — you should draw income from first.

You also should decide when and how you’ll claim Social Security to help maximize that benefit and how you’ll deal with required minimum distributions (RMDs) when you reach age 70½. You’ll need to look at market risk, inflation risk and tax efficiency. (I’m always surprised by how retirees overlook the tax consequences of their decisions. By managing withdrawals and avoiding the possibility that you’ll be bumped into the next tax bracket, you can help save on your tax liabilities.) It’s also important to maintain some flexibility, in case your situation changes through the years. Whether or not they were married earlier in life, many women will be single at some point during their retirement years. With that in mind, I always urge both spouses to stay involved in the planning process.

Investment adviser representative vs. insurance agent

As you near retirement, you’ll probably receive invitations to talk about your financial future with various financial professionals. In the process, you might hear from insurance agents who say that they think the market is too risky, or from investment adviser representatives who might tell you they do not like certain insurance products. These professionals can be as partisan as Republicans and Democrats. There could be some benefit from including both investments and insurance products in your retirement strategy. Keeping some stocks in your portfolio may help you deal with inflation down the road, and insurance products, such as annuities, can provide guaranteed income for those who want more stability. A financial adviser, who is licensed to offer both, can assist you in choosing the best options for you within the context of your overall plan.

As you search for someone to trust with your nest egg, consider an independent adviser, a fiduciary who will work in your best interest, who isn’t tied to one investment or idea and has access to a variety of financial vehicles to assist you with your strategy.

Ultimately, the plan you create should be able to meet your needs so that you feel confident that you’re going to be OK.

I’ve had prospective clients show me plans that say they have a 90% chance of making it through retirement. And I ask them, “If you and I were about to fly to New York, and you learned that out of the 100 people boarding the plane, only 90 were going to make it, would you get on?” Of course, the answer is no.

So, is it OK to have a plan that only makes you feel like you have a 90% chance of success?

If you, or the professional you work with, haven’t yet come up with a detailed plan for your retirement, remember: It’s time to protect your future.

Kim Franke-Folstad contributed to this article.

We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. Investment advisory services offered through Ocotillo Wealth Management, a state-registered investment adviser. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Any references to protection benefits, safety, security, or steady and reliable income, etc. streams on this website refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods, which vary by insurance company. Annuities are not FDIC insured. This information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation. Our firm does not offer, and no statement made here in should constitute tax or legal advice. You are encouraged to consult with a qualified professional before making any purchasing decisions.

About the Author

Jeremy Mellberg, Investment Adviser Representative

Founder, Ocotillo Wealth Management

Jeremy Mellberg is an Investment Adviser Representative and founder of Scottsdale, Arizona-based Ocotillo Wealth Management ( His practice focuses on wealth accumulation, asset protection, retirement income strategies, IRA and 401(k) rollovers, life insurance and annuities. Jeremy has been seen on CBS, ABC, NBC and Fox. He and his wife, Jessica, have three children.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
7 Best Commodity Stocks to Play the Coming Boom

7 Best Commodity Stocks to Play the Coming Boom

These seven commodity stocks are poised to take advantage of a unique confluence of events. Just mind the volatility.
September 8, 2021
Stock Market Holidays in 2021

Stock Market Holidays in 2021

Is the stock market open today? Take a look at which days the NYSE, Nasdaq and bond markets take off in 2021.
September 2, 2021


What Is the Social Security COLA?

What Is the Social Security COLA?

This year especially, cost-of-living adjustments are late to the party, as consumers are feeling the effect of price spikes now.
September 16, 2021
Retirees Likely to Receive Significant Bump in Social Security Benefits in 2022
social security

Retirees Likely to Receive Significant Bump in Social Security Benefits in 2022

The cost-of-living adjustment for Social Security benefits for next year is expected to be the largest since 1982.
September 16, 2021
Is a Target Date Fund Right for You?

Is a Target Date Fund Right for You?

You're busy, and poring over investments is a pain. Wouldn't a target date fund be easier? Take a look at their pros and cons to see if incorporating …
September 14, 2021
The RMD Solution to the Hassle of Filing Estimated Taxes in Retirement
required minimum distributions (RMDs)

The RMD Solution to the Hassle of Filing Estimated Taxes in Retirement

If you don't need the money to live on, wait until December to take your RMD and ask the sponsor to withhold a big chunk for the IRS.
September 14, 2021