Planning for retirement is one of the most important financial steps employees can take to secure their future. A well-structured retirement planning checklist ensures you’re prepared for the transition from work to retirement, helping you avoid common pitfalls and maximize your benefits. Here’s what every employee should know before they retire.
1. Review Your Retirement Accounts
- Maximize contributions to your 401(k), IRA, or other employer-sponsored plans. Take advantage of catch-up contributions if you’re age 50 or older.
- Ensure you’re contributing enough to receive the full employer match, if available.
- Consider additional savings vehicles, such as a Health Savings Account (HSA), to cover qualified medical expenses in retirement.
2. Estimate Your Retirement Income and Budget
- Calculate expected income from all sources: Social Security, pensions, investment accounts, and any other streams.
- Use a retirement planning checklist to create a detailed budget, factoring in monthly and annual expenses like housing, healthcare, travel, and leisure.
- Compare your projected spending to your anticipated income to identify any gaps and make necessary adjustments.
3. Understand Social Security Benefits
- Know your full retirement age and how claiming early or delaying benefits impacts your monthly payments.
- Use Social Security estimators to model different claiming scenarios and optimize your strategy.
- Coordinate with your spouse or partner to maximize household benefits.
4. Assess Your Current Retirement Savings
- Review your portfolio to ensure your asset allocation matches your risk tolerance as you approach retirement.
- Consider reducing exposure to volatile investments and increasing holdings in safer assets as you near your retirement date.
- If your planned withdrawals exceed 4% of your portfolio annually, consider saving more, adjusting your retirement date, or revising your spending goals.
5. Plan for Healthcare and Long-Term Care
- Estimate future healthcare costs, including insurance premiums, out-of-pocket expenses, and potential long-term care needs.
- Explore options for supplemental health insurance or long-term care insurance to protect your assets.
6. Develop a Withdrawal Strategy
- Decide how and when you’ll draw from your retirement accounts to minimize taxes and ensure your savings last.
- Understand required minimum distributions (RMDs) and plan accordingly.
7. Address Estate Planning
- Update your will, beneficiary designations, and power of attorney documents.
- Consider consulting with an estate planning professional to ensure your wishes are clearly documented and your assets are protected for your heirs.
Key Takeaways for Employees
- Start early and revisit your retirement planning checklist regularly.
- Make the most of catch-up contributions and employer matches.
- Track your expenses and adjust your savings or retirement date as needed.
- Plan for healthcare, taxes, and estate needs to ensure a smooth transition.
By following this comprehensive retirement planning checklist, employees can approach retirement with confidence, knowing they’ve covered the essentials for a secure and fulfilling future.
For personalized guidance, contact Target Retirement Solutions—your partner in retirement planning.
