Financial Planning for Retirement

Secure your retirement: essential financial planning for a worry-free future

Female Neighbor Helping Senior Woman With Domestic Finances

There’s a saying that the best time to plant a tree was 20 years ago – the second best time is now.

The same is true of saving for retirement. If you haven’t been preparing for this transition, taking inventory of your assets now is crucial for achieving your retirement goals.

There are many factors that contribute to financial security in retirement. In this article, we’ll look at key considerations to keep in mind so you can set yourself up for success.

Make a plan

Nancy Buck, a financial advisor in the Cleveland office of Janney Montgomery Scott LLC, and member of NYSE, FINRA and SIPC, says, “One of the best things seniors can do is make a financial plan.”

Budgeting is important no matter where you are in your career, and a financial plan is simply a budget specifically accounting for your needs in your non-working years. “This plan includes a list of assets,” Buck says, “including accounts, pensions, social security, and things like houses or cars that you can’t spend unless you sell them – and factors in the expenses you predict you’ll have.”

Buck adds that it’s important to check this plan each year to make sure you’re sticking to your budget.

Creating this plan with a fiduciary – or a trustee who puts your financial interests in scope so as to benefit the beneficiary – will give you peace of mind that your financial planner is working in your best interest. There are more than a hundred credentials that financial planners claim to have. It doesn’t make them skilled or ethical.

Calculating assets

What do you need to live comfortably in retirement? Vanguard suggests budgeting for roughly 75-85% of your pre-retirement expenses. The money you live on in retirement comes from regular income, where you’re guaranteed consistent payments, such as social security – and variable income sources, which include savings accounts that you’re responsible for. As you take inventory of your assets, account for the following:

  • CDs
  • Part-time work income
  • Pension
  • Rental income
  • Sale of real estate, vehicles or other valuables
  • IRA accounts
  • Stocks

As the Department of Labor reports, social security retirement benefits will account for an average of approximately 40% of yearly pre-retirement income for retirement beneficiaries. While that’s a significant percentage, it’s likely not enough to retire on by itself, so it’s important to have a clear idea of how much you’ll receive. The Social Security Administration makes it easy to get an estimate of your benefits by creating a My Social Security account.

If you’re considering downsizing, you may have more flexibility as you put the funds from the sale of a home toward a smaller living space. If your move takes you out of state, consider your proximity to a support network, explore rent or home prices, and understand the tax implications of your new state of residence. All these factors may impact whether the move frees up more cash for retirement or increases your cost of living.

Assessing expenses

In retirement, you’ll still have many of the same expenses you’ve had throughout adulthood: rent or mortgage, utilities, food, insurance and taxes. Some costs may go down – for instance, you’ll save cash if you receive Medicare benefits, have paid off your mortgage or no longer commute to work – but there will also be new costs to prepare for.

The Social Security Administration reports that an estimated one in three 65 year olds will live to age 90. Additionally, Buck notes that while your plan may account for health care, it may not anticipate a major health event. As life expectancy increases, it’s important to be realistic about how many post-work years you’ll need to pay for and the assistance you may need during those years.

Part of planning for retirement, Buck says, is assessing your ability to finance long-term senior care, whether that looks like a move to an independent or assisted living community, hiring an in-home caregiver or choosing a skilled nursing residence. “People are under the assumption that Medicare will pay for long-term care,” Buck says, “and it doesn’t.”

For some older adults, becoming a burden on their family and friends is a very real fear – as is the worry about going into debt as a result of medical expenses. The best way to avoid those challenges is to take an honest inventory of your financial situation and create a clear retirement financial plan.

Retirement timeline

5 years before retirement

This is a good time to start reviewing your regular income estimates, such as pension and social security benefits. Look into retirement workshops, and ask your employer if they offer any additional resources for retirement planning.

2 to 3 years before retirement

Start thinking about what you want to do in your retirement years. If there’s a club or organization you’d like to be a part of, start fostering those connections now. Continuity is important for a smooth transition to retirement, and having an established hobby and active social group outside of work can be an asset for mental health.

1 year before retirement

Work with your financial advisor to review your plan and assess:

  • What adjustments you may want to make to your healthcare plan during your employer’s next open enrollment period
  • Whether any changes need to be made to any retirement accounts
  • If you’re on track to meet your financial retirement goals

This is also a good time to start pulling together the documents you’ll need as you enter retirement. These may include a birth certificate, social security card and marriage or divorce certificate.

3 to 6 months before retirement

If you’re ready to retire, let your employer know. This will help you set in motion any paperwork and announcements required. Check to see if there’s an official time frame for which your employer requires a letter of resignation.

Four months before you plan to begin receiving payments, you can apply for Social Security – but be aware that the longer you wait to collect, the more you’ll be paid. Payments are based on credits earned during your top 35 earning years, so if you continue to work and anticipate making more in the coming years than you did in any of the years used to calculate your current payment, waiting to enroll could make your rate go up. The Social Security Administration’s retirement checklist can walk you through the best way to optimize your benefits.

Though it doesn’t cover everything, Medicare is a useful tool for helping to pay for parts of senior needs. Medicare is health insurance for Americans 65 and older, and you can apply up to three months before turning 65, unless you meet a qualifying exception that allows you to enroll earlier.

Finally, get ready to enjoy the next chapter of your life.


For some, a retirement plan includes a legacy that accounts for what will be shared with family and friends. This includes non-tangibles like life lessons and memories, as well as financial assets and physical heirlooms.

In addition to a clear financial plan, finance experts recommend including these three essentials when planning for your later years:

  • A will
  • A healthcare directive
  • A durable power of attorney

It’s important to include family and close friends in this process so they know your wishes and can execute them.

Retirement provides a natural opportunity for getting these affairs in order, as people are already taking inventory of their assets and thinking about the future. In addition to providing an opportunity to reflect, Merrill found that older adults who had all three essentials in place felt more in control of their medical treatments and costs.

Writing a will can provide a helpful lens for thinking about your assets and the future. Forbes Magazine recommends revisiting your will every few years, even if you haven’t had any big life events, because the assets that are most important to you, and how you’d like to share them with others, may change with time.

Mental preparation

Having your retirement finances in order provides peace of mind as you enter your non-working years.

According to Merrill, 94% of Americans over the age of 55 say that friends and family are what determines a life well lived. Their study isn’t the only one that says so. While financial security is paramount in one’s retirement years, who you’ll spend those years with is a better indicator of how content you’ll be.

At Holiday, our flat rent makes budgeting for retirement easy, and our vibrant independent living communities offer a convenient choice for your lifestyle. For more information on how you can prepare to thrive mentally and emotionally in retirement, read our blog on adjusting to retirement.

Helpful resources

Retirement finances require careful planning. Here are some additional resources that may help you navigate your retirement savings, health care options and next steps.

Franklin Templeton Retirement Guide

National Institute on Aging – Financing Care

Holiday by Atria – Tips for Downsizing

Forbes – Preparing a Will

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