Retirement Planning Checklist: How to Get Retirement Ready

Retirement is a time to kick back and enjoy what you’ve worked so hard for. But before you can do that, it’s wise to ensure your existing strategy is on the right track by comparing it to a retirement planning checklist. 

When you begin retirement planning for high-net-worth individuals there are multiple factors that need consideration, such as determining your income needs, assessing and diversifying your retirement savings priorities, and reviewing your estate plans. With so much to keep in mind, having a checklist can help you stay organized and monitor your plan all the way through your retirement.

So, whether you’re preparing for your future or are getting ready to enter into your well-deserved retirement, you can use this checklist to work towards being retirement ready.

How to prepare for retirement: Your retirement planning checklist

General information

1. Has relevant personal information been gathered?

This needs to include your name, your spouse’s name, and the number of minor children under your care as well as their ages.

2. Has your financial situation been assessed?

When planning your high-net-worth retirement it’s smart to take a holistic look at your current and anticipated financial state. This could include reviewing points such as: 

• Estimated annual expenses during retirement
• Estimated annual income during retirement (pre-tax and after-tax)
• Total assets and savings to date
• Total retirement savings to date
• Estimated yearly contribution to retirement savings
• Total liabilities to date
• Income tax bracket and filing status
• Health insurance coverage for each spouse
• Long-term care insurance coverage for each spouse
• Life insurance coverage for each spouse
• Wills, durable power of attorney, health-care proxy, and other estate planning information
• Beneficiary designations (and are they coordinated with estate planning documents?)

Determining retirement income needs

1. Has life expectancy been estimated to project how long retirement will last?

It’s hard to predict how many years you’ll need retirement savings for. As a safe guess, you can assume you will need savings through the age of 95.

2. Have clear goals and objectives been established for retirement?

When determining your goals and objectives for retirement, you can include everything from financial goals to personal goals such as wanting to donate so much a year to a cause close to your heart.

3. Have other major financial goals been funded or achieved?

This can include everything from paying off the home mortgage to funding your children’s or grandchildren’s education and even buying a retirement home, second home, or vacation home.

4. If not, have those other goals been prioritized with retirement goals?

5. Have annual retirement expenses been estimated, keeping in mind that those expenses may change from year to year?

Expenses to consider include:

• Food
• Clothing
• Housing
• Insurance
• Health care
• Travel and recreation

6. Have annual retirement income needs been estimated, based on the preceding goals and expenses?

7. Has expected annual income been estimated, and will that income be sufficient to meet retirement needs?

Sources of income in retirement can include:

• Social Security (Including start-date maximization and other strategies)
• Pensions (also discussion of Pension Lump-Sum vs. Annuity and also survivor needs?)
• Savings and investments (including IRAs and retirement plans)
• Job earnings

8. If not, are there steps that can be taken to bridge the gap?

Steps taken to meet your retirement needs may look like this:

• Work part-time
• Cut expenses
• Set more modest goals
• Delay retirement

9. Have inflation, taxes, and conservative rates of return been factored into these estimates?

It’s not enough to expect the unexpected. You need to have a plan for it. Solid financial plans for retirement include a risk management plan.

Employer-sponsored retirement plans and IRAs

1. Do you have a 401(k) or other employer-sponsored retirement plans that have been funded (also includes, 403(b), SEP, SIMPLE, or other plans)?

Examples of other employer-sponsored plans include:

• Summary Plan Description Review
• Vesting
• Company Stock (NUA Rollout)
• In-Service Distributions
• Loans
• Other Roll-Over Considerations

2. Are IRAs in Place?

There are two types of IRAs: Roth IRAs and traditional IRAs. The right retirement account for you will depend on your tax strategy. Roth IRAs are grown with after-tax dollars and therefore have tax-free withdrawals after a certain age. On the other hand, traditional IRAs grow tax-deferred with your pre-tax dollars and get taxed upon withdrawal.

3. Are the tax issues associated with taking distributions from IRAs and employer-sponsored plans understood?

This includes being sure you are aware of the tax implications and laws around required minimum distributions (RMDs) and withdrawals. For example, you can start withdrawing money from your 401(k) without penalty after the age of 59 ½. If you withdrawal before that age, you will need to pay an additional 10 percent tax penalty.

4.  Do you have any other employer plans that need to be considered for tax or financial planning impact?

These may include:

• Deferred Compensation Plans
• Stock-Option or Restricted Stock Plans
• Golden Handcuff or Golden Parachute
• Other Employer Stock (and any Buy-Sell Provisions that would impact retirement decisions or post-retirement work)

Annuities and other savings tools

1. Do you currently have any current pay or deferred annuities or other insurance products?

2. If so, have the taxation issues, benefits/guarantees, and the related payout options been reviewed/understood?

3. Have a payout option and payment beginning date been chosen or targeted?

4. Are there other savings tools owned, whether part of the retirement portfolio or not?

Other savings tools could include:

• Cash-value life insurance
• Mutual funds/ETFs
• Stocks and bonds
• CDs or other Cash Equivalents
• Private Deals

5. If so, are the tax issues surrounding these tools understood, and have they been reviewed for proper tax placement?

Investment planning and portfolio management

1. Now that retirement is here (or near), have plans been made to change how the retirement portfolio and other assets are invested (or new strategies)?

One thing to consider when reviewing your retirement portfolio is diversifying your portfolio between the safest investments for retirees such as a market fund or CDs and higher-risk investment vehicles like stocks, bonds, and retirement accounts.

2. Will the client/advisor monitor the retirement portfolio and other investments throughout retirement and make changes when appropriate?

• Do you have a written and understood investment discipline?
• Do you have a portfolio monitoring and benchmarking strategy?
• Do you have the tools to monitor your consolidated portfolio?
• Do you have the tools to monitor the ongoing progress of your financial and retirement plan vs. your long-term and short-term goals?

3. Have expectations been established for how the retirement portfolio and other investments will perform in the coming years?

• Do you have your return target?
• Do you know your “Hurdle Rate” or the minimum rate of return on an investment required by your wealth manager?

4. How much portfolio risk are you willing to accept in retirement?

Your retirement plan should include a strategy regarding how you will protect your retirement income. 

Some questions to consider include:

• Have you reviewed your targeted asset allocation and will your current allocation be appropriate in retirement?
• Do you know the level of risk in your portfolio — stress tested for interest rate changes or market downside participation?
• Are you or your investment team employing any downside protection strategies as part of your portfolio management discipline?

5. Has a retirement income distribution strategy been discussed/developed?

• Have you run a “stress test” or a Monte Carlo Simulation on your financial plan to help you determine your needed investment returns?
• Do you have a prudent retirement income distribution plan that is tax-efficient (Planning for Retirement the R.I.T.E. Way^®)?

Insurance planning

1.  If under age 65, will adequate health insurance be available until Medicare eligibility is established?

• Do you have retiree healthcare coverage from your employer?
• Do you have any issues that will prevent you from getting reasonable coverage if the Affordable Care Act is repealed?
• Have you built these expenses into your financial and income plan?

2. If 65 or older, has a Medigap or other health policy been purchased to supplement Medicare, or is employer-sponsored coverage available?

• If you have or will have retiree healthcare coverage from your employer, do you know how it is coordinated with Medicare?
• Are you currently or will you be using a retiree healthcare plan that includes an HSA?

3. Do you have long-term care insurance?

• Is your plan adequate to meet your needs?
• Are you aware that in many long-term care policies premiums are not guaranteed to stay level?
• Have you considered the impact of a health event that would cause the need for nursing or home healthcare on your financial plan?

4. Have life insurance needs been revisited and have your policies been reviewed?

It’s good to keep in mind that employer coverage may end in retirement. If it does, what is your plan? Do you still have a need for your existing life insurance?

5. Have other types of insurance coverage been reviewed for gaps or changes?

Other insurances you may want to consider include:

• Auto and homeowners
• Disability (will end at retirement)
• Liability (for rental properties or umbrella coverages)

Estate planning

1. Have your Wills and Trusts been reviewed/updated?

• Change in distribution or legacy plan?
• Change in executors or trustees?
• Need for more advanced planning (trust planning, gifting, estate/income tax minimization strategies, business succession, charitable planning, see below)?

2. Have you updated your beneficiary designations to be coordinated with your wills, trusts, and distribution plan?

This could include:

• Employer-sponsored plans
• IRAs
• Annuities
• Life insurance
• Note: Have you coordinated any asset titling to be better coordinated with your estate plan (such as “Joint with Rights of Survivorship”)?

3. Have you reviewed your durable powers of attorney or health care proxy?

4. Have other estate planning tools and strategies been considered?

This may include:

• Estate and Income
• Tax Minimization Strategies
• Gifting Strategies
• Charitable or Legacy Planning Strategies
• Business Succession Strategies (for business owners)

Need help planning for your retirement? Avidian Wealth Solutions is here for you.

You don’t have to navigate this preparing for retirement checklist alone. Avidian Wealth Solutions offers customized high-net-worth retirement planning in Houston that helps you answer all of these questions while taking into account the rest of your financial plan. Our multi-disciplinary team is comprised of highly credentialed, multi-disciplinary professionals, all prepared to help you achieve your dream retirement.

To learn more about how we can help you build and maintain your retirement wealth, schedule a meeting with us today.

More Helpful Articles by Avidian: 

• Short Term Capital Gains Tax in Texas
• How to Set Up an Asset Protection Trust in Texas
• Should Your Tax and Financial Advisor Help With Your Tax Planning?
• What is Asset Allocation and How Do I Integrate It Into My Financial Plan?
• What is a Family Office: Concierge Services for Wealthy Families

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