Bringing your retirement plan to life

You’re ready to take action and get your retirement plan set up. Now what?
Think about retirement planning in four steps:

  1. Dream it: Identify your primary goals and needs for the future
  2. Finance it: Meet your retirement goals financially
  3. Protect it: Use estate planning to help document your wishes
  4. Stay fit for it: Create a plan to maintain health and wellness as you age

Keep in mind, everyone will have their own unique combination of factors: you might be 40 years old and packing your oldest off to college—or changing diapers on your newborn. Maybe you are starting a new career at 50 or getting remarried at 60. Many aspects of your life will help shape your individual retirement strategy. That being said, the following steps are relevant for every adult—whether you’re in your 20s or your 80s—to think about and use to set an initial retirement plan.

  1. Dream it: Identify your primary goals and needs for the future. This step may take you some time as you will want to think carefully about how you would like to live as you approach the retirement years. If you are closer to 60 already, you will probably find it easier to envision your retirement years than if you are in your 20s or 30s. However, no matter what age you are, it’s important to be flexible and update your plan as your life changes. Here are a few important considerations to help you work through some scenarios and come up with a plan that suits the most likely scenario.
    • Depends on dependents: Do you have any dependents that you will still be providing for as you hit your 60s and 70s? This could affect your decision-making on when to retire and how.
    • To retire or not to retire: Do you need to—or want to—keep working into your sixties and seventies—or longer? This might mean making a realistic plan for how to keep generating income past the traditional 65-year-old retirement age.
    • Life of leisure: Do you want to have a more traditional retirement, where you stop working completely around 65 and enjoy leisure activities such as travel, golf, gardening or volunteering? Is it your dream to retire even earlier?
    • Home is where the heart is: Do you plan to stay in your current home? Will it be comfortable as you age? If not, you may need to factor a move into your retirement plans.
    • Health expectations: Your health—such as whether you have a high risk for certain types of cancer or chronic conditions—can be a critical consideration if you need to keep working or when you are thinking about where to live. 
  2. Finance it: Meet your retirement goals financially. There are many options available and it is important to find the best ones for your personal situation. However, here are some of the basic considerations:
    • Status check: Retirement calculators can help you estimate a minimum level you should have saved for retirement at this point in time and roughly how much you will still need. This is important because it will help you determine if you should step up your contributions, change your investment asset allocation or think about ways to continue to earn more money now or in the future.
    • Tax-deferred comes first: Retirement savings options, such as 401(k) and 403(b) plans, as well as individual retirement accounts (IRAs), allow you to contribute to a plan with pre-tax dollars. These plans can be an efficient way to save because you lower your taxable income at the same time.
    • Assess your other assets: If you are already maxing out your annual contributions to a tax-deferred retirement savings plan, you can still save in a variety of ways through a savings and other accounts.
    • Saving for college: 529 college savings plans are not tax-deferred, so contributions still come out of your income after taxes, but they are not subject to capital gains taxes, which can be an equally helpful tax benefit.
    • Life insurance: If you have dependents that you need to provide for in the event of your death, then life insurance may be a worthwhile consideration for you.
    • Investing in a home: Homeownership can be viewed as a way of saving (by steadily paying off your mortgage you end up with a meaningful asset) as well as a potential future source of income.
    • Social Security: Get to know how the system works and calculate the best time to start getting distributions.
  3. Protect it: Use estate planning to help document your wishes. Estate planning is important for everyone. There are several basic categories of estate planning to consider in conjunction with your own legal advisor, many of which can be stated in a combination of a will and living will.
    • Assets: You will already likely have specific designated beneficiaries for any retirement accounts, college savings and life insurance. But it’s also important to express how you would like other assets, such as regular bank accounts or brokerage accounts, any home you may own or other valuables, be divided. You might also need to consider setting up trusts for minors or charitable causes.
    • Custody: If you have minor children or family members with special needs, it is extremely important to have clear custody arrangements for them in place in the even that you are unable to take care of them. You might even want to specify your wishes with regard to any pets you have.
    • Health: Stating what kind of medical care you want—or do not want—in the event you are not able to give consent, particularly in a life-threatening situation, is called a living will. This document can be especially helpful to relatives who might have to make these difficult decisions for you.
    • People: Who is an appropriate executor for your will? Do you need to give someone power of attorney for your financial accounts? Who will carry out decisions regarding medical care, in the event that you cannot make the decisions? Ideally, you should have at least one person and a back-up who could help out if needed.
  4. Stay fit for it: Create a plan to maintain health and wellness as you age. Health and wellness become increasingly important topics as we age and will have implications for your ability to work and earn an income, where you live and your general quality of life. Some additional health-related considerations as you plan for the future are:
    • Health insurance: having health insurance coverage is important for young adults and increasingly important for older adults. In addition, seniors should become acquainted with the Medicare system, which can be complicated but often provides a majority of coverage for older adults. Health savings accounts offered by many employers are another practical way to save for regular health expenses that are not always fully covered by health insurance plans. 
    • Wellness plan: developing good habits for exercise, healthy eating and stress management is important already for young adults; maintaining these habits is critical as you age. 

As you prepare to set up your own personal retirement plan remember that life changes over time, and so should your retirement plan. 

This informational and educational content does not offer or constitute and should not be relied upon as financial, tax or legal advice.  Your unique needs, goals and circumstances require and deserve the individualized attention of your own professionals, and Equitable Advisors, LLC (Equitable Financial Advisors in MI and TN) and its affiliates and associates do not provide tax or legal advice or services.
GE-3364393.2 (01/2023) (Exp. 01/2025)