Seven Steps to Plan for Every Aspect of Retirement

It’s more than just getting paperwork in order, making a plan for Social Security and strategizing on taxes. Your bucket list needs some attention, too.

A couple talk with a financial adviser in his office about retirement planning.
(Image credit: Getty Images)

Retirement planning is a comprehensive process, and it is critical to prepare proactively to secure your financial future. Here’s an overview of seven important steps to help you navigate that phase of life for which you’ve worked so hard to enjoy.

1. Get organized.

Empty the financial junk drawer. During your working years, you may have collected several investment accounts. Make an organized list to see if it’s beneficial to still own each of those accounts or if things could be simplified by combining them.

Also, complete a budget, and build that budget with retirement in mind. For example, if your commute is decreasing, you might be spending less on gas. But if you like taking weekend trips, your gas costs might actually go higher.

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Make sure you have fun stuff on your bucket list, like foreign travel, which is often best done in the early years of retirement when you still have the health to do so. Use some retirement planning tools to take a look forward. Review what your expenses vs your assets might look like and account for things like inflation.

2. Factor in tax planning considerations.

Have a general understanding of taxes in retirement, such as how different things like your pension, retirement accounts, investments and Social Security are taxed in retirement so you don’t have unwelcome surprises.

Use tax-efficient withdrawal strategies. Make sure you’re pulling appropriate amounts from each account to minimize your overall tax vulnerability. Also, factor in state tax considerations; some states are more tax-friendly for retiring, so if you choose to relocate in retirement, be aware of that state’s tax percentages and build them into your cost structure.

3. Understand Medicare filing and choices.

It’s important to know your enrollment timeline. Have a general understanding of Medicare Parts A, B, C and D, what each cover and their costs. Look at supplemental policies, such as Medigap or Medicare Advantage plans, to help provide additional coverage in retirement.

4. Consider Social Security filing and optimization.

Determine the best age to start claiming benefits. The age at which you start receiving Social Security will impact the amount of your monthly benefits. The longer you defer, the higher the payments are.

Be aware of spousal benefits and strategies you might take. If one spouse stayed at home while the other worked and earned more, they might be able to claim a spousal benefit even if they didn’t work enough on their own to qualify for Social Security.

Also, learn the impact of working in retirement with your Social Security benefits. If you plan on working a part-time job or doing some consulting, make sure you’re aware of how your Social Security will be taxed and any penalties you might have in association with that.

5. Think through investment planning.

Think through your asset allocation, adjusting your investment portfolio to balance growth and risk as you approach and enter retirement. The goal is to have enough safe assets to withdraw from to satisfy your income needs for anywhere from a six- to 10-year period. That way, any market corrections would not derail your retirement plan.

You also want to factor in required minimum distributions (RMDs) from retirement accounts and when and how they might impact your asset allocation. Also, make sure your investment strategy accounts for inflation so that 20 years from now you still have the same purchasing power that you have today.

6. Look at legacy planning.

There’s a lot to consider in estate planning — wills, trusts, beneficiary designations, etc. — in order to ensure that your assets are distributed according to your wishes.

Also be aware of the tax implications for your beneficiaries, understanding how your estate will be taxed and how to minimize this burden for them. Also, consider your charitable giving and the goals you have within your estate.

7. Make purpose-driven decisions.

It’s important that you take the time to redefine your identity close to retirement — exploring new hobbies, volunteering, opportunities for part-time work or other activities that help bring fulfillment to your life. The worst type of retirement is when you just sit on the couch and watch the news all day. Set personal goals and lifestyle goals to maintain a sense of purpose and direction, and prioritize your health and wellness to make sure you enjoy retirement to the fullest.

Effective retirement planning is a multifaceted process that balances financial security with personal fulfillment, with careful consideration of tax implications, health care needs, income strategies and personal goals. Consulting with financial advisers, tax professionals and health care consultants can provide valuable guidance tailored to your individual circumstances.

Dan Dunkin contributed to this article.

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 was not compensated in any way.

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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.

Josh Leonard, Investment Adviser
Partner, Leonard Advisory Group

Josh Leonard is the president and a financial adviser at Leonard Advisory Group, LLC. He is the host of the “Relax, It’s Retirement” podcast and holds regular informational webinars. He is a married father of two and an aspiring endurance athlete. He holds a life insurance license and has passed the Series 65 securities exam. (Investment Advisory Services are offered through Leonard Advisory Group, LLC, a registered investment adviser. Insurance products and services are offered and sold through Joshua Leonard, an individually licensed and appointed agent.)