Your 7-Step Roadmap to Retirement

No matter what stage of life you’re in, it’s never too early to plan for retirement. And whether you have substantial savings or are just starting out, putting a detailed plan together can help you live your best retirement life, without worry about outliving your nest egg or withholding yourself from enjoying the retirement you’ve worked so hard to build.

Specifically, your plan should involve seven key areas, starting with defining your retirement goals to reviewing or establishing your estate plan.

To help you address these areas, we put together a straightforward, seven-step roadmap in our complimentary ebook. We encourage you to download the ebook so you can get a deeper sense of the preparation and start formulating your plan.

Meanwhile, we have laid out an abbreviated roadmap below, hitting key points to help get you started on making your retirement vision a reality.

Get the Ebook!

Read the seven-step guide to meeting your future goals.
Download Roadmap to Retirement today.

Step 1: Establish Your Retirement Goals

Consider starting your retirement plan by establishing your retirement goals, as these can serve as the foundation for the financial strategies you select.

Start by answering questions such as:

●  How do you want to spend most of your days?

●  What feeling do you want to get from retirement?

●  What will you do with your home?

●  Are you on the same page as your spouse or others you plan to spend retirement with?

These types of questions can help you define your goals for retirement in areas ranging from work to leisure to family life.

While you don’t need to define every detail of what you want your retirement to look like, planning for lifestyle changes such as whether you will move or the activities that you will pursue from day to day can help give you direction. It can help give you the time to make adjustments to your finances and put your retirement plan on a path to success.

Step 2: Project Your Retirement Income

To see whether you’re on track to meeting your retirement goals, it can help to get a sense of your income in retirement. Calculate your projected income from sources such as:

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Retirement savings accounts
Whether you’ve been saving on your own in an IRA or through your employer via a 401(k), you can convert the balances into monthly income based on how much you draw from these accounts. Working with a fiduciary financial advisor can help you determine the distributions to make from your accounts, and in what order, to pay for living expenses throughout your retirement.

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Social Security income
As Social Security benefits are an important income source for many people, you’ll want to know how much you can expect to receive. The amount can vary on factors such as your history of wage earnings and the age at which you claim benefits. To estimate your benefits, you can use this online calculator from the Social Security Administration.

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If you or your spouse have participated in a pension plan, be sure to check with the plan administrator to see how your benefits are calculated. Payments can vary from plan to plan; getting a clear sense of what you can expect to receive can help you plan accordingly.

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Savings and investment accounts
Similar to how you can draw on your retirement accounts for monthly income, you can incorporate your savings or investment accounts, such as a brokerage portfolio.

Note: Since your retirement, investment, and savings accounts can be used to cover a gap between guaranteed income (like Social Security or a pension) and expenses, you may want to determine your expenses (see the next step) before determining how much you will draw from such accounts.

You may also have additional income sources, such as a part-time job in retirement. Adding up all these sources may help clarify whether you can financially support your ideal retirement.

Are You on Track?

A fee-only financial advisor can provide detailed cash flow scenarios as part of the overall retirement planning they provide. Schedule a complimentary, 30-minute call to discuss your financial situation and see how we can help guide you toward reaching your goals.

Step 3: Estimate Your Expenses

Once you understand your projected income, you can move on to calculating your expenses. Doing so will help you see whether your income will cover your expenses or if you’re in danger of spending more than you take in. Knowing this equation can help you to make adjustments ahead of time to reach your goals.

In particular, you should estimate your expenses in areas such as:

●  Housing, e.g., mortgage and maintenance costs

●  Daily living costs—think about how your daily life might change in retirement, such as spending more time on hobbies or traveling, and the impact on your finances

●  Charitable giving—you may decide to increase your charitable contributions in retirement, particularly if you spend more time getting involved in causes you’re passionate about

●  Health care—online calculators such as this one from AARP can help you get a better sense of your potential expenses beyond what Medicare would cover

●  Long-term care, e.g., expenses such as home health aides or assisted living facilities

Adding up these expenses, even if only an estimate, may help you determine whether you need to take action, such as increasing your retirement plan contributions now, or even whether you’re in a better position than you thought.

Step 4: Evaluate Insurance

In retirement, your insurance needs may change, particularly if you currently receive insurance through your employer. Consider areas such as:

●  Health insurance: Take a look at whether you need supplemental health insurance to pay for what Medicare does not.

●  Long-term care insurance: Medicare will not cover long-term care except in very limited circumstances, and long-term care is expensive. You need a plan to cover potential care needs; consider whether an insurance policy should be part of that plan.

●  Life insurance—Not every retiree needs life insurance, but depending on your goals and family situation, it may serve you.

If you are having trouble determining your insurance needs, talking with a financial advisor may help. They can provide recommendations based on your overall financial situation and goals. We recommend you talk with a fee-only advisor who is a full-time fiduciary. That way, you can feel confident that their advice is not made to sell you a product but is in your best interest.


Talk with a Financial Advisor About Your Retirement

Consider working with a full-time fiduciary financial advisor to build a retirement plan that incorporates all of your financial areas, including cash flow, retirement plan distributions, taxes, insurance review, and estate planning. Schedule a complimentary, 30-minute call to discuss your financial situation and see how we can help guide you toward reaching your goals.

Step 5: Be Proactive About Debt

While some debt can be used wisely to help you reach your goals, you may not want loan balances hanging over your head in retirement. Take a look at your debt sources such as:

●  Mortgages

●  Car loans

●  Revolving debt, e.g., from credit cards

Consider whether paying off these debts before retirement would make managing your finances easier, as you would not have additional payments to account for and the interest expenses would not be eating away at your retirement income.

Paying off your debts before retirement could also provide you with an additional safety net, as you might borrow against assets such as the equity in your home, if need be. Our ebook, Roadmap to Retirement, provides details to help you determine your appropriate debt level.

Get the Ebook!

Read the seven-step guide to meeting your future goals.
Download Roadmap to Retirement today.

Step 6: See Whether Your Savings Are on Track

Change in a Money Jar

Once you know how your projected retirement income stacks up against your estimated expenses, and when you have a plan for debt management, you can then determine whether you need to adjust your savings strategy.

In some cases, you may need to contribute more to your retirement savings accounts, and you also might decide to adjust your account strategy. For example, you might contribute more to a Roth IRA rather than a traditional IRA if your retirement plan involves living in a high-tax state.

In addition, review your cash reserves to help determine if you have enough money set aside to cover unexpected events such as a market downturn or a major home repair. Your specific amount would vary based on your situation; however, we generally recommend that retirees have six months’ worth of living expenses in a savings account.

Step 7: Review Your Estate Plan

If you already have an estate plan, take time to review it to see if it still aligns with your legacy wishes and that beneficiary designations are updated. And if you haven’t created an estate plan yet, now is a good time to start.

An estate plan can help ensure that your wealth will be distributed to your heirs according to your wishes. You can create the financial and legal vehicles to manage how you want your wealth directed, such as if you have philanthropic goals.

Your estate plan can also protect you should you become incapacitated. Talk with your financial advisor or estate planning attorney about medical and financial powers of attorney, as well as advance directives for the medical decisions you would want to be made on your behalf if you were unable to make them yourself.

Couple Working on Estate Planning

Schedule a Complimentary Call with a Financial Advisor

Following this seven-step roadmap can help put you on a path toward making your retirement vision a reality. We recommend downloading our ebook to gain more insights for each step along the way.

Retirement planning can be complex, and you may find you want the assistance of a financial advisor. We recommend you talk with a fee-only financial advisor who is a full-time fiduciary to get unbiased guidance to help simplify your retirement picture and stay on track to meet your goals.

Fiduciaries are legally obligated to put your best interests first, and fee-only advisors don’t take commissions or any payments from anyone other than you. That means you’ll get a retirement plan that is geared toward what helps you, not what makes the advisor money.

At Clayton Wealth Partners, we serve as life consultants for all the stages of our clients’ lives, including retirement. Based in Topeka, we provide comprehensive financial planning and investment management to clients throughout Kansas, including Topeka, Lawrence, Garden City, Dodge City, and Hays. As full-time fiduciaries and fee-only advisors, we are committed to objective advice that brings clarity to your options and helps you achieve your goals.

We’d be happy to discuss your specific situation and how we may be able to help. Simply get in touch with us to schedule a complimentary, 30-minute call.