By most standards, America is facing a retirement crisis that is likely to get worse in coming years. Not only are Americans not saving enough to retire, many struggle to cover their current living expenses. In fact, the Federal Reserve  found that 12 percent of adults couldn’t cover their monthly expenses if they faced a single unplanned $400 expense. They also discovered that 33% of adults are a single, modest financial setback away from economic hardship. 

Exactly why are so many people struggling financially? Failing to save seems to be linked to stagnant income and rising expenses more than anything else. Alissa Quart, executive director of the Economic Hardship Reporting Project and author of “Squeezed: Why Our Families Can’t Afford America” says that middle class life is currently 30% more expensive today than it was 20 years ago.

When you don’t make enough to cover your monthly bills, saving money for the future seems entirely out of reach. Additionally, lack of access to financial planning tools, like 401(k)s, makes long-term planning more difficult and less effective. But there is a silver lining on the topic of retirement planning; no matter where you’re starting from, you can take measures today that add up to a more secure financial future.

Retirement Planning Tips and Checklist 

Some people daydream about the day when they can say goodbye to their 9 to 5. Others can’t imagine what they’ll do with the free time after they retire. No matter what your opinion is of retirement, it is inevitable.

Fortunately, there are steps you can take to financially prepare yourself for retirement. The sooner you start, the better off you will be, but it’s never too late to start planning for retirement. And while your circumstances will vary, the following list of critical retirement planning steps can help you get started on the right path.  

Determine your retirement savings goal  

How much do you need to save before you retire? This is not an easy question to answer, and it will vary based on the type of retirement you want. For instance, do you dream of traveling the world or are you happy to stay home and pursue hobbies? Will your house be paid off by the time you retire? Are there medical expenses you can forecast based on issues you have now?  You must weigh all of these factors into your retirement calculations.

There are several ways to come up with a retirement savings goal. One common method is to multiply your current annual spending by 25%. This could allow you to withdraw 4% a year to live on once you retire. Another method is to aim to save 70-90% of your annual pre-retirement income. In reality, your situation is unique and needs to be evaluated individually to truly create a retirement saving’s plan.  


Create a retirement budget
Most retirees worry about running out of money, and it’s an understandable fear. After all, when your active income ends, you have to make do with your savings, which can be daunting. One way you can prepare for this is not only to save enough for a comfortable retirement, but you should also create a retirement budget. This shows your estimated retirement income alongside your estimated monthly living expenses.

By comparing these two numbers you can see how much you need each month to live comfortably. This allows you to adjust your overall retirement saving goals, but also your monthly spending post-retirement to help you stretch the money you do have. Just remember, when you’re considering expenses, include fixed expenses and variable expenses based on your actual situation. If your house will be paid off, remove it from the equation.


Take a look at your Social Security Statement
Social security is there to help you retire, but it should not be your sole source of retirement income. Keeping this in mind, it is still an income stream you should look at when making retirement plans. To do this, you’ll need to view your Social Security Statement. This shows the amount of Social Security income you may receive each month when eligible.

The Social Security Administration might mail this statement to you yearly around your birthday, but you can create an account online and view it any time you want. Simply follow this link to create an account and view your most recent statement. This information is not considered final, however, because it displays uncertified yearly earnings. It can, however, give you an estimate to factor into your retirement planning.  

List your assets and debts
You can’t have a good understanding of your financial health without looking at your assets and debts. Together, these two data points provide a quick snapshot of where you are financially. This also helps you create a roadmap toward retirement so that you’re fully prepared by the time you reach retirement. This might include strategies to reduce debts, increase income and build assets.

While you can simply write everything down, it might be more helpful to create a spreadsheet to track your debts, income, savings and assets. Your assets should include everything of value you have, such as your cars, your home and other valuable possessions. Don’t forget to update your spreadsheet when things change so that your snapshot is up to date.

Pay down your debt
Debt can quickly eat away at your income during your active earning years, which is why many people live paycheck to paycheck. During retirement, when you’re active income is gone, debt can be dangerous. For this reason, you should work to reduce debt now so that your retirement savings don’t have to go toward servicing debt.

There are many ways to approach paying off debt, but one of the most common is the Snowball method. To do this, you start by listing all of your debts, smallest to largest. Pay off the smallest first, and then take the payment you would normally make on it and place it on the next debt in your list. Every time you do this, your able to make larger payments on the next largest bill, allowing you to more quickly pay down debts.


Start an emergency fund
The Federal Reserve’s found that 33% of adults are one, small financial setback away from economic hardship. This highlights the need for creating a financial buffer between you and life, starting with an emergency fund. This will keep small setbacks from completely sabotaging your life and your and retirement savings.

There are a few schools of thoughts on how much you should have in a rainy-day fund. One rule of thumb is to save up 3 months of living expenses. This would be enough to fully operate your household for 3 months with out additional income. If something happens, you can tap into this savings and leave any retirement savings untouched.

A word of caution about emergency funds – you need to define what counts as an emergency long before you need it. People sometimes use their savings for non-emergencies because it’s handy. Instead, create a short list of emergencies like job loss or medical issues. And remember to quickly replace anything you use as soon as possible.

Utilize retirement planning instruments
Saving for retirement requires more than just stocking money away in a savings account, it requires investing. The easiest way to do this is to participate in 401(k)s, so if your company has one, take advantage of it.  Many companies also offer matching contribution plans which will expedite your ability to save. This has the advantage of being taken from your paycheck before you see it, which makes saving easier.

There may be additional financial instruments you can use to help you plan for retirement, such as Roth IRA’s. These operate differently than 401(k)s and have different tax implications. For this reason, it’s important to consult with a financial advisor to determine the best route for you.

Plan for retirement housing
Retirement housing can be a sensitive and difficult are to consider, but it is important to think ahead and make plans. You should start by answering these key questions:

  • Are you planning on staying in your current home after you retire?
  • If you are, will it be paid off before you retire? 
  • Do you want to downsize or relocate after you retire?
  • Do you have any health issues now that you can anticipate needing to make living modifications for?

Your retirement plan should consider the possibilities so that you and your family are ready for whatever comes your way. 


Look at post-retirement health insurance
Healthcare costs are problematic for most people, but they can be a real burden for retirees. Medicare is the standard insurance option for those who are 65 and older, but it may not be enough. It also comes with costs and limitations, so you should understand how it works and consider if it will be sufficient for you after you retire.

Typically, the average worker has paid enough into the system that by the time they retire, they don’t have to pad for standard Medicare Part A coverage. However, this only helps cover the cost of hospital and nursing home stays, with limitations. Medicare Part B is also available, and it helps cover routine medical care like doctor visits. This coverage is not free, and the premium is based on your annual income.

Retirement Planning Resources
No matter your age or financial status, talking with a financial advisor experienced in retirement planning is a smart idea. They will examine your current financial situation, your retirement goals and help you find a way to reach them. You can lean on their expertise to make a solid retirement road map.

But you also want to be knowledgeable so that you can make sound decisions and understand the implications of the choices you make. Here are some resources to help you gain more knowledge about retirement and retirement planning.


Our clients can also take advantage of our 401(k)-management system and retirement projection tools. If you aren’t sure how to access these free tools, contact your customer service representative.

The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.

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