Whether you’re nearing retirement or have already entered this stage in your life, planning out how to live your retirement years can be daunting. You want to ensure you will not outlive your money, but you don’t want to scrimp so much that you can’t enjoy your retirement.

The good news is that you can feel more confident in your retirement by establishing a vision for what you want this period of your life to look like and build your plan around that vision. With a clear picture of what you want retirement to be, you can establish goals in areas such as how much you need to save, how much additional income you need to earn (if any), what types of insurance you should purchase, and more.

We take a look at the retirement areas to explore in an eight-step process that we have laid out here. To get started, just read on! However, to go more in-depth, please download our ebook, which covers these eight steps in more detail.


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Download Understanding the Ins and Outs of Your Retirement Preparation today.


Step 1: Define Your Vision

A clear vision can set the scene for your retirement planning, so take the time to consider your ideal retirement. Include specifics such as:

  • The age you want to retire at

  • How you want to spend your time, e.g., pursuing hobbies, traveling, volunteering

  • Where you want to live, e.g., in your current home, in a new one in a different part of the country or abroad

Take some time to discuss your ideas with your partner so together you can build a shared retirement vision.

Ultimately, there's no “correct” way to retire. The choice is yours, and planning now for what you want can help you attain your dream retirement. That way, you'll have more time to adjust financial levers to fit your vision.

For example, if your dream involves traveling around the world, but you don’t necessarily have the savings to do so, perhaps you will decide to make the trade-off of selling your home and downsizing to travel more. But if your dream retirement also involves living in your current home, then you can consider other levers you can adjust now, such as working a side job or contributing more to your retirement accounts to attain additional income.

As you work through the remaining steps, you’ll see what you need to account for and how you can plan accordingly for your ideal retirement.


 Step 2: Calculate Your Income

Just as understanding your income throughout your career has helped you plan for events such as buying a home, knowing what your income will likely be in retirement can help you more specifically plan for what you envision.


As such, you should consider all sources of income, such as:

  • Retirement savings accounts, e.g., 401(k)s and IRAs
    Your savings accounts can be converted into monthly income. Your income amounts will depend on how much you want to draw down your savings vs. living off the investment gains from these accounts, along with other factors such as how many years you plan to draw from these accounts. Many free online calculators like this one from NerdWallet can help you calculate what your income will be from these accounts based on your unique variables. You can also work with a financial advisor to get detailed projections.

  • Social Security income
    Social Security income alone may not support your retirement vision in full, but it still plays a crucial role for many people. The Social Security Administration provides a calculator for estimating your Social Security benefits so you can know what to anticipate.

  • Pensions
    If you have a pension, be sure to calculate what that monthly or annual income will be. If you’re unsure about your pension benefits, talk to the plan administrator to get a better understanding.

As the ebook explains in more detail, you can also consider other sources of income, such as proceeds from selling real estate or continuing to work. These additional income sources can go a long way toward helping you meet your retirement vision.


Find Out Your Retirement Cash Flow

Working with a financial advisor can help give you confidence about cash flow in retirement. Schedule a complimentary, 30-minute call to discuss your situation and how we may be able to help.


Step 3:
Plan Out Your Expenses

As with income, one way to know if you will have enough money in retirement is to calculate the other side of the equation—your expenses.

Your retirement vision can help you determine what your expenses will be, based on your goals and needs in areas such as:

  • Housing

  • Transportation

  • Vacation

  • Entertainment

You should also factor in other areas such as health care. Such areas may be difficult to predict precisely, but realistically taking them into consideration can help you feel confident that you won't outspend your nest egg.


Step 4: Tackle Your Debt

Just as understanding your income throughout your career has helped you plan for life events, knowing what your income will likely be in retirement can help you realize whether your retirement vision is sustainable.

In addition to expenses related to your lifestyle in retirement, consider other costs that can arise, such as the interest you’ll pay on any debt. This can include interest from sources such as:

  • Credit cards

  • Personal loans

  • Mortgages

Depending on your retirement vision, it could be best to pay off these debts before retirement so that you incur the least amount of expenses as possible. In other situations, however, carrying some debt can be helpful, such as when it saves you some cash that you can put toward a home. Thus, it’s important to consider debt in the context of your retirement vision.


Step 5: Prepare Your Savings

Calculating your income and expenses and gaining a clear picture of your debt can help you realize whether the math adds up in meeting your retirement vision.


In other words, if you’ll likely spend less each month than your monthly retirement income amount, you’re probably in good shape. If you’re spending more than you take in, however, you may need to problem-solve to reach your goals.

In addition to considering how much you’ll need to save, you may also want to think about how to structure your savings.

For example, if you already have sufficient savings and can meet your retirement goals, you may be best served by opening high-yield savings accounts, certificates of deposit, or conservative bond investments.

Conversely, if you need more income, you may want to ramp up your savings in investment accounts that invest in index stock funds that may have more volatility but could earn higher returns.


Have You Saved Enough for Retirement?

Are you on track for retirement? Schedule a complimentary, 30-minute call to discuss your situation and how we may be able to help.


Step 6: Consider Insurance

While working, you may receive insurance through your employer, but once you retire, such decisions will largely be in your hands. Even if you receive health coverage through programs such as Medicare, you may want to purchase supplemental insurance, as well as long-term-care insurance (see the next section for more details). These policies could reduce the risk of paying for significant expenses that deplete your savings and hurt your retirement.

In addition, you may want to consider life insurance if you will have dependents in retirement. You may also consider a policy to help hedge against the risk of you passing away before you're able to position your finances to establish an inheritance.

Your decision should be made in the context of your overall goals, so it may be helpful to talk with a financial advisor for recommendations. By making sure your advisor is a fiduciary and fee-only, you’ll be able to trust that their advice is made with your best interests in mind, rather than being based on earning commissions from insurance companies.


Step 7:
Plan for Long-Term Care

As you age, your health care needs may change. While it may be unpleasant to consider such changes, it’s important to plan for them, as such coverage can be very expensive. Even if you don't foresee needing help, it's still prudent to plan for "just in case" scenarios. Since Medicare will not cover long-term care except in very limited instances, you may want to consider long-term-care insurance.

In addition to having a plan to pay for long-term care, you should also consider what type of care you’d like to receive if the need arises. Of course, such decisions will be shaped by future circumstances, but having conversations with your loved ones now can help ensure everyone is on the same page.


Download the Ebook!

Get more details on preparing for your ideal retirement. Download Understanding the Ins and Outs of Your Retirement Preparation today.


Step 8: Establish an Estate Plan


A key component to retirement planning is making sure your estate planning documents are in order so that your wishes are carried out as you intended. This extends not only to the people you would want to make financial or medical decisions on your behalf should you become unable to do so yourself, but also to the inheritance you want to leave.

To lay the foundation for an inheritance, don't limit yourself to the tangibles, like real estate. Think about the intangibles too, like your values. For example, if you want to leave an inheritance of helping others, consider establishing charitable vehicles to pass on a legacy of philanthropy.

Make sure to set up your estate plan with the help of an experienced attorney, and make sure all necessary steps are carried out. If you are working with a financial advisor, they may coordinate with your attorney on the details, making the process easier for you.


Bonus Step: Consider Hiring a CFP® Professional


By following these eight steps, you can be well on your way to an enjoyable retirement. The key is diligently looking into each of these areas. That’s why we recommend downloading our ebook to gain more detailed insights into retirement planning.

It is also why we recommend consulting with a financial advisor. Retirement has a lot of avenues, and the right financial planner can pull together all the areas of your finances into a roadmap for retirement.

We recommend you work with a fee-only, fiduciary financial advisor. Fee-only advisors are paid only by clients and never accept commissions, which helps eliminate potential conflicts of interest. A fiduciary advisor has a legal obligation to put your best interests first in all of their recommendations. If your advisor has the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation, all the better. CFP® professionals must undergo rigorous and ongoing education, experience, and ethics requirements to maintain their credentials.

At HC Financial Advisors, we serve as trail guides for retirement and other transitions. Based in Lafayette, California, we are a fee-only, fiduciary Registered Investment Advisor serving the San Francisco Bay Area. We provide the expertise of CFP® professionals committed to financial planning and investment management that helps our clients find their way through the various transitions and stages of life, including retirement.


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