Retirement Planning Checklist

There are a few different things that go into retirement planning and you should know the steps you need to take whether you want to retire five years from now, a year from now or a month from now.

Retirement Planning

When preparing for retirement, it’s best to start the process at least a year ahead of time. However, even if your retirement date is sooner than that, it’s still possible to follow a great retirement plan.


There are plenty of advantages that you can get from planning the retirement process early on, making sure that you have the right retirement plans and retirement savings to ensure that you reach your retirement goals no matter what they might be. After spending a long time working hard and building a life for you and your family, it’s time to start spending some quality time enjoying those investments. However, before settling down and submitting an application for retirement, it’s important to know about some of the expenses in retirement that people can face and how to best plan their retirement fund based on their current cash flow.

According to research, about 70% of people over the age of 65 tend to require some type of long-term care for about three years, and the costs for long-term care tend to be on the rise. Although plenty of people are aware of these types of retirement expenses, not everyone plans for them ahead of time. Another expense might be the insurance coverage and health care coverage that some people will need once they retire.

Other considerations might be for Federal civilian employees, who have the option to apply for the Federal Employees Retirement System along with receiving potential additional service credit, where the more retirement service credit a person has when they retire, the greater their monthly retirement benefits and retirement savings are going to be. Or one might consider credit cards that have reward programs that are created to allow people to deposit any cash rewards into their retirement accounts. Finally, one cannot forget the importance of beneficiary designations of retirement if necessary.

What Is Retirement Planning

Retirement planning is simply preparing ahead of time for the future, including determining the retirement income goals as well as what’s going to be necessary for someone to achieve their goals. Before submitting a retirement application, it’s important to sit down with a financial advisor to discuss a financial plan, the sources of income, any estate plans, monthly payments, living expenses, and medical expenses, and insurance plans, and the various types of retirement options.

Retirement Planning Process

There are a few different retirement options that people can choose from, and it’s important to plan the key steps of each stage of the process: at least the year before it actually happens, through to a couple of months before retirement, and continue once a person has retired. Throughout this time, it’s important to set retirement goals, invest to grow the retirement savings, and estimate the amount of money a person will need once they’re retired (their “income in retirement”. Since each retirement plan is different since people tend to have different ideas regarding how they want to spend their retired lives, it’s important to plan ahead for those goals and choose options that will suit your needs. That means considering the types of likely expenses in retirement and how big they might be each year to determine the retirement income and safely cover any potential surprise expenses. There are three types of expenses that people need to plan for: the essential ones such as living expenses, household, transportation, and health expenses; discretionary expenses such as hobbies, education, travel, donations to charity, gifts, and entertainment; and onetime expenses like emergencies, weddings, college tuitions, and home improvements.

When To Start Planning For Retirement

It’s best to start planning retirement at least a year in advance to figure out what kind of monthly expenses and benefits a person might need in the future. The first step is to think about retirement goals and the time it will take to achieve those goals, as well as the types of retirement accounts that can help people raise the money from their current cash flow that they’ll need to finance their future decisions. As that money is saved, it can also be invested. Although there is no single rule that everyone can follow, a great general piece of advice is to save at least 12 years of the pre-retirement annual income for retirement. However, to truly determine the best retirement option, it’s best to calculate the ideal savings for retirement for each person and their individual circumstances and consult with a financial advisor.

Why Retirement Planning Is Important

There are a few different reasons why people should be planning their retirement ahead of time, which helps avoid any financial dependence in the future. With the help of retirement planning, people can continue their current lifestyle without changing it too drastically and make the right arrangements to cover for a longer life. Retirement planning is also helpful in terms of fighting inflation, as people can invest in advance to get around any changing standard of living. In case of any future medical expenses or financial emergencies for different health issues, with the help of a retirement plan, it becomes a lot easier to create an emergency fund to be help be ready for any sort of unexpected situation.

How To Account For Inflation In Retirement Planning

Since the prices have been steadily rising all over the world, everyone that has been planning to retire has started to worry about the sort of life they’ll be able to afford in retirement. Inflation directly impacts people’s purchasing power, especially if it’s sustained over a longer period of time, which is why it’s important to plan for it in retirement. Although the precise percentage of inflation in the future isn’t easy to determine, it’s important to take the variable into consideration when planning retirement accounts and future monthly income based on individual circumstances.

Withdrawal Penalty

Some of the common ways that people can save for retirement are retirement savings accounts and 401k plans, however, there are sometimes unplanned situations that people can find themselves in that make them withdraw the funds from these long-term savings accounts early. While this is an option for many people, there are many consequences in terms of taxes and penalties. That’s why, before thinking about withdrawing from a 401k or a retirement savings account, it’s important to know the options that people have. For instance, the IRS allows people to withdraw from their retirement accounts with no penalties after they’re 59, and should anyone withdraw before they’ve reached that age, they’ll owe a 10% penalty on the amount they’ve decided to withdraw, owe a federal income tax, as well as relevant state income tax.

Retirement Planning Strategies

There are some incredibly helpful retirement planning strategies that everyone should know to help them reach their retirement goals in the future.

Retirement Planning 101

Anyone with an employer-sponsored retirement plan can take advantage of that plan and contribute to it as much as possible. These 401k plans allow people to grow their retirement funds tax-free, and they’re funded directly from the paycheck before taxes, which reduces the taxable income. On the other hand, if a company doesn’t offer a 401k plan, there is always the option to open an individual retirement account with a bank or even a brokerage firm, which has the same benefits as 401k plans. However, when going through an individual retirement account, people have a few more investment options, as they’re able to build their investment portfolio with various vehicles such as mutual funds, bonds, stocks. It is important to consider the fees involved with various investment vehicles when building a retirement portfolio. It’s also important to remember that once a person retires, a big portion of the retirement income is likely going to go toward healthcare expenses, which means everyone should be prepared for it, and one of the best ways to do that is by opening a health savings account. The contributions toward these types of accounts are like a 401k plan, as they’re tax deductible and the earnings grow tax-free.

Retirement Planning Tax Strategies

Once they retire, most people have an income flow from a few sources, and there are different ways to minimize the taxes on each of them, the biggest one would be living or moving to a state that’s tax-friendly like Florida, Alaska, Nevada, Washington, Wyoming, Tennessee, Nevada, Texas, and South Dakota. Investing in municipal bonds is another way of saving on taxes in retirement because they are free from federal income tax, but they might affect Social Security benefit taxes.  There are also dividend stocks that are taxed at better rates. People can use the losses on the sale of securities and other property to offset any capital gains taxes. People who are at least 72 can avoid paying taxes on the required minimum distributions from their traditional IRA if they decide to transfer those funds to a charitable organization. One can also postpone taking the required minimum distributions from an IRA by investing in a special deferred annuity, which will also help ensure that people won’t run out of their retirement income. People can start receiving social security benefits at the age of 62, but if they do not need them, they can delay taking them until the age of 70 and the benefit amount will increase.

Advanced Retirement Strategies

One of the biggest anxieties many people face today when retiring is outliving their income during their retirement. However, this issue can be solved by purchasing a fixed annuity, and people can use their retirement funds to purchase one. The company that issues the annuity will provide the customer with monthly payments which can either be received immediately or deferred until a later set date. Finally, the best advanced retirement strategy is to plan as early for retirement as possible, using different scenarios and strategies to figure out when a person can retire and how much they should be drawing from their retirement account annually. That means it’s important to consult a financial advisor to analyze pension options, Social Security claiming strategies and any changes to asset allocation in a portfolio at least five years before retirement.

Retirement Planning Mistakes

The most common mistake that people make is not taking the time to develop a detailed retirement plan. Having a plan makes the entire retirement preparation process a lot easier, helps people focus on investing in a diverse portfolio as early as possible – even if they have to start small in the beginning.

Retirement Checklist

Retirement date

The first step in planning a retirement is figuring out when a person wants to retire, while taking into consideration the benefits of working longer, the quality of life in the future and any potential health issues that can have an impact. Before retirement, it’s also important to figure out what the plan is for their estate and investment portfolios and determining beneficiary designations. These plans can be frequently updated as circumstances change, but it’s crucial to detail them beforehand.

Income needs

The next step in planning a retirement is to analyze the planned spending during retirement.  In general, people need to replace around 80% of their working income once in retirement. However, it’s important to account for the impact of lifestyle changes when analyzing the planned spending. Once this has been determined, it’s important to figure out whether the spending rate is going to be maintainable and reasonable in the future. In some cases, it’s important to create a long-term investment portfolio based on the anticipated income needs in retirement.

Maximizing benefits

Once a person has planned how much they intend to spend in retirement, it’s important to quantify how much income they’ll be able to receive from the various income sources in retirement and figure out how different decisions can impact benefits such as Social Security or a pension. If a pension or Social Security doesn’t cover basic expenses, people can invest in an annuity that will meet their needs.


Most people, once they retire, have their assets in a number of different tax groups, such as taxable and tax-deferred income. Each one of those groups has its own taxes and implications for the types of securities in them, which is why it’s important to pay a lot of attention to tax management beforehand.


Finally, it’s important for people to analyze their insurance coverage for retirement before they retire, as some types of coverage are essential, such as homeowners insurance, or car insurance. Medicare is another insurance which needs to be assessed to determine if it will be adequate to cover potential health needs; if not, then other supplement insurance coverage such was long-term care insurance may need to be considered.


In summary, it’s important to start planning retirement as early as possible to get the benefits that mean the most to you during retirement. Take account of your current income and investments, figure out what kind of life you hope to lead in your retirement, and make the necessary decisions and adjustments that best will fit your needs. Consult with experienced people like Andina Advisors to help develop a retirement strategy and execute your retirement plan. Don’t hesitate to reach out to Andina Advisors today and learn more about what benefits you can get from planning your retirement early today!