Are You Confident in Your Retirement Plan? Take This Quiz

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Many people approach retirement with a high level of confidence, feeling good that their careful planning will serve them well in the years ahead. Others are uncertain. They worry about running out of money and being unable to capitalize on the free time retirement brings. And some exude a false confidence that erodes when they realize that, actually, they can’t answer retirement’s most pressing questions.

One of my goals when talking with prospective clients is to help them determine their confidence level. I ask them to score themselves from 1 to 10, with 10 being the highest level of confidence and 1 the lowest. (This scoring system comes with an asterisk. Fence-sitters are not allowed, so no one can score themselves a 7 — that is what people default to when they are indecisive and want to take the middle ground.)

Ideally, you want a confidence score of 8, 9 or 10, which indicates your retirement planning is where it needs to be, or close. If you score a 6 or lower, you have work to do.

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How to measure your confidence level

Tossing out a number doesn’t have much meaning unless you base it on something. That’s why the scoring is tied to how much preparation those approach ing retirement have already accomplished in five key areas of planning: income, investments, tax, health care and legacy.

Let’s look at what it takes to earn a confidence level of 8, 9 or 10. While we do, think about how you would score yourself in each area.

Income. You know where your money will come from in retirement. Options might include Social Security, a pension, an IRA or 401(k) or rental property. You also know how much you can withdraw from your retirement accounts annually without putting yourself at risk of outliving your money. If you have multiple accounts, you know the best order for when to withdraw money from which accounts. You also know the most opportune time for you to claim Social Security to meet your individual needs and circumstances.
Investments. You know your risk score, which will help you determine which investments are appropriate for you and how much risk you are comfortable taking. You also know that you would be able to survive a major market correction.
Tax. You have one to three strategies in place to help mitigate your current taxes and reduce your future taxes with the goal of eventually eliminating your taxes altogether.
Health care. If you will retire before you become eligible for Medicare at age 65, you have a plan to fill the gap. You have a clear understanding of how the income-related monthly adjustment amount (IRMAA) works. (IRMAA is an extra charge people with high incomes must pay for Medicare Parts B and D.) You also have a plan for what happens if you face a major medical event.
Legacy. You already have an estate plan containing a will and maybe also a trust. Your trust is properly funded. Your beneficiaries are updated, so you are certain your assets will go to the people or causes you intend.

How did you score?

Did you have high scores in each area? Low scores? Was it a mixed bag? Are you strong on the income side of things (an impressive 9 maybe) but weak with your health care planning (perhaps a lowly 3)? Do you feel good about your tax plans but know you are lacking when it comes to legacy planning?

If you had high scores across the board, then congratulations. But if you’re lacking in one or more areas, it’s time to get your plans in order.

A financial adviser can help you develop strategies that are appropriate for your individual needs in all of these retirement planning areas. They can help match your income needs to your planned retirement lifestyle. They can help you determine your risk score and discuss strategies for reducing your taxes. They can discuss options for planning for health care costs, and they can review with you the kinds of things you should consider with legacy planning.

Then, when retirement arrives, you can feel more confident you are ready. Instead of spending sleepless nights wrapped in anxiety, you will have a better chance of enjoying the retirement you have longed for.

Ronnie Blair contributed to this article.

Investment Advisory Services offered through Elevated Capital Advisors, LLC, an SEC Registered Investment Advisor.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Sean P. Lee is a managing partner and Investment Adviser Representative with Elevated Retirement Group. Since 2002, Lee has helped families reach and maintain their financial goals. Lee has been featured in The Wall Street Journal’s Market Watch, The Deseret News, The Salt Lake Tribune and USA Today. He has also been featured as a local financial adviser on Utah’s NBC station, KSL 5.