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Retirement Readiness Checklist – Are You Able to Retire?

Retirement Readiness Checklist – Are You Able to Retire?

January 17, 2024

Determining if you’re on track to retire can be more manageable if you break it into smaller steps. Using a checklist can help you understand the key variables that will make your retirement plan succeed or fail. It can help you course-correct before it's too late.

If you're starting to think about retirement and what your retirement plan should look like, here's a list of key items to help you think through the most important variables.

1. Consider Your Retirement Date

One of the key steps as you develop your retirement plan is determining when you plan to retire. Of course, the financial payoff of working longer has been well documented: Delayed portfolio withdrawals, additional retirement plan contributions, tax-deferred compounding, and a larger Pension and or Social Security benefit can all contribute to your decision. You'll also want to consider quality-of-life issues, health, and whether you can actually continue to do your job later in life.

2. Assess Your In-Retirement Income Needs

The next step in the process is to take stock of your planned in-retirement spending. One common rule of thumb for that job is the 80% rule – in retirement, you'll need to replace about 80% of your working income. Taxes may go down and you won't have to save as you did when you were working, which represents the bulk of that 20% reduction. Moreover, many retirees plan lifestyle changes in retirement that will affect their spending. Some retirees may be planning to downsize or move to a lower-cost part of the country, while others may expect spending to increase because of heavy travel plans. Because forecasting your anticipated income needs is such an important component of crafting your retirement plan, make sure you right-size your income needs by looking at your expected expenses line item by line item. Also, remember that your spending won't necessarily be static from year to year.

3. Quantify and Maximize Pension and Social Security Benefits

How much of those income needs will be supplied by Social Security and/or pension income? The next step in the process is to quantify how much income you'll receive from those sources and to consider how your decisions can enlarge or shrink those benefits. Delaying Social Security, for example, will enlarge your eventual benefit and is often a good option for people who anticipate longer-than-average life expectancies. On the other hand, opting for the pension payout that doesn't just cover you for your lifetime but also provides a benefit for your spouse if you predecease him/her will reduce the payout that you receive. These decisions are mission-critical: The more of your income you're able to replace with Social Security or pension, the less you'll have to rely on your portfolio to pay the bills.


4. Determine Whether Your Planned Spending Rate Is Sustainable

Once you've determined your in-retirement income needs and how much of them will be covered by certain sources such as Social Security and or a Pension, your portfolio is going to have to supply the leftover amount. The annual dollar amount you plan to withdraw from your portfolio, divided by your portfolio's current value, is your withdrawal rate (or even better, your spending rate).

5. Craft a Long-Term Portfolio Based on Your Anticipated Income Needs

Once you've determined your spending plan, the next step is to structure your portfolio to support it. Long gone are the days when retirees can subsist on the income from their cash and bonds; today's retirees also need the long-term growth potential from stocks. To help structure your portfolio, the idea of using your cash flow needs to determine how much to hold in cash, bonds, and stocks is helpful. 

6. Pay Attention to Tax Management

It would be so simple if we could each bring just a single portfolio into retirement, but the reality is much messier. Most retirees hold their assets in a variety of tax silos: tax-deferred, taxable, and Roth. Each of these accounts carries its own tax treatment, which has implications for the types of securities you hold within them. In addition to "asset location" considerations, it's also worthwhile to harmonize how you'll withdraw from these accounts for your cash flow needs, as doing so can reduce the drag of taxes on your withdrawals. The best withdrawal strategies factor in required minimum distributions and Social Security taxation, among other issues. Early retirement, before required minimum distributions commence, may also be a good time to consider making changes, such as converting traditional IRAs to Roth. If all of this sounds complicated, it is – which is why it's wise to get some tax guidance as you plan your withdrawal strategy.

7. Assess Insurance Coverage

Nearly all of the insurance coverage that made sense while you were working – auto and homeowners insurance, for example – will still be necessary while you're retired. But Medicare adds a new wrinkle to healthcare coverage for retirees, along with purchasing supplemental coverage to pick up what Medicare doesn't. It's also worthwhile to consider other types of coverage, notably long-term care insurance, well before you're retired. The decision about how to cover long-term care outlays if they arise is a complicated one.

8. Make sure your estate's planning documents are in order

Your wishes in case you should die or become incapacitated are valuable at every life stage, but they take on increasing importance as we age. What do you want to happen to your financial assets? Who do you want to be able to make important financial and healthcare decisions on your behalf? What instructions do you want to give your spouse or other loved ones about your portfolio? Retirees and pre-retirees should ask – and answer – all of these questions when they're of sound mind and body and update their estate plans and beneficiary designations periodically to reflect their current situations.


Schedule a time to review or create a plan for retirement with us by sending an email to or by calling 207-761-4733.