My Retirement Checklist

My family thrives on checklists because without them we would almost certainly head to the beach for a long vacation without sunscreen or our swim trunks. Preparing for retirement can feel a bit like a really long vacation, constantly wondering if there’s something you haven’t thought of. That’s why I created my retirement checklist to walk clients through as they prepare for retirement.

I wanted this checklist to be more detail-oriented than what you might find online so that it would truly be helpful in thinking through every aspect of your finances. There are 33 items altogether and for simplicity, it is broken down below into 3 parts, (1) Income & Expenses, (2) Investments & Taxes, and (3) Health Insurance & Social Security.

Part 1 - Income and Expenses

Income

☐ Go to SSA.GOV and log in or create an account and get a full benefit statement.

☐ If applicable, get a current pension benefit statement.

☐ Calculate how much income your investments can provide on a monthly basis.

☐ Outline your income at various income stages throughout retirement.

For example, Bill and Jane are retiring in June 2021 and need $8,000/month to live on.

Expenses

☐ Calculate your retirement budget and ensure that it is less than your monthly income available.

☐ List irregular retirement expenses (saving for a car, home maintenance, car maintenance, and other expenses) and include them in your monthly budget.

☐ Live on your budget for 12 months prior to retiring as a way to stress test it. Consider having paychecks go into savings and setting up a monthly transfer to go from savings to checking that is equal to your retirement budget.

Part 2 - Investments & Taxes

Investments

☐ Research and understand the historical volatility of your nest egg. For example, what would it have done during 2000-2002 or 2007-2008? 

☐ Have an investment plan for how you will deal with volatility when it comes. For example, when bonds become more than 50% of my account, I will rebalance my portfolio. 

☐Ensure that your portfolio can sustain the monthly withdrawals needed throughout retirement. While the stock and bond markets will continue to evolve, history is the best guide for analyzing this.

☐ Determine which accounts to withdrawal from first to minimize lifetime taxes.

☐ Once you know which account to withdrawal from first, determine which investments should be sold each month to fund withdrawals for spending.

☐ If retiring before you claim Social Security, determine how to create an “income bridge” from investments between retirement and when you claim Social Security.

☐ If you plan to be withdrawing from investments, create direct ACH links between your investments and your checking account.

Taxes

☐ Calculate your expected federal and state taxes owed.

☐ Make a plan to pay them via direct withholdings or by paying quarterly estimated taxes.

☐ Evaluate tax planning opportunities during the first few years of retirement. Due to the big income fluctuations these first few years, there are a few tax strategies to consider.  Some strategies that come up often include withdrawing from the optimal account, timed Roth conversions, and more.

Part 3 - Health Insurance & Social Security

Health Insurance & Medicare

☐ See if your employer provides any retiree health plan or benefits.

☐ If applicable, decide what private health plan to get before Medicare age 65. 

☐ Decide whether to get a Medicare Advantage plan or Original Medicare.

☐ If getting Original Medicare, decide if you want a Medicare supplemental plan, and if so, what type to get. Include the cost of this in your budget.

☐ If getting Original Medicare, decide what Medicare prescription drug plan you need based on current or expected medication. This is known as Part D

☐ Calculate the premiums you will pay for Part B and Part D based on your income and include the cost in your budget. This is typically based on your income from 2 years ago. For 2021 premiums, if your 2019 income was over roughly $176,000 (married jointly) or $88,000 (single), you are subject to higher premiums.

☐ Using the example above, if your 2019 was higher than you expect it to be in going forward, you can appeal the premium on form SSA-44 and select the “Work Stoppage” or “Work Reduction” box.

☐ Calculate how much to set aside for out-of-pocket health care expenses and include them in your budget. 

Life Insurance

☐ Take inventory of all of your life insurance policies. What is the death benefit? When do they expire if applicable? What is the monthly cost?

☐ Do a life insurance analysis and determine whether you still need the policies or if you are self-insured.

☐ If you have cash value policies and don’t need them, calculate the tax consequences of cashing them out and determine the best tax year to do that in.

Long Term Care Plan

☐ Determine if you have adequate long-term care insurance to cover potential costs later in life?

☐ If don’t have long-term care insurance, create a long-term plan. This could include using home equity or preserving part of your nest egg for these expenses later in life – or moving in with the kids…just check with them first!

Social Security

☐ Using your benefit estimate from SSA.gov, create a Social Security strategy for when to start benefits based on family longevity, income sources, and taxes. 

☐ If taking benefits before full retirement age and while working, make sure your benefits won’t be reduced due to the earnings test.

☐ If filing for Social Security benefits now, complete form W-4V to have Federal taxes withheld from your benefit.

Thank you for reading,

Alex

This blog post is not advice. Please read disclaimers.