Building a Strong Retirement Plan: A 15-Minute Blueprint

In recent years, retirement planning has taken on a new significance, becoming a priority for individuals seeking financial security in the future. A survey conducted by the Federal Reserve in 2021 revealed that a significant percentage of non-retired adults in the United States feel uncertain about their retirement savings. This underscores the need for a well-thought-out and strategic retirement planning approach. To address this need, we present a comprehensive 15-minute retirement plan template. This structured guide aims to help you organize your thoughts, define your retirement goals, and establish feasible financial objectives, empowering you to chart your retirement course confidently.

Setting Clear Retirement Objectives: A solid retirement plan begins with establishing clear and measurable objectives. Start by determining your desired retirement age, considering life expectancies, health concerns, desired lifestyle, and career satisfaction. With the average life expectancy in the United States reaching around 79 years, it is crucial to analyze your retirement income needs accordingly. Financial analysts generally recommend aiming for a retirement income goal between 70 and 85 percent of your pre-retirement salary to maintain your current standard of living. However, individual circumstances may require adjustments. Assess your current lifestyle costs to estimate retirement expenses accurately, projecting future expenses and potential lifestyle changes. Once you have determined your desired retirement income, establish a savings goal using retirement calculators considering inflation rates and long-term investment returns. Additionally, consider potential income sources during retirement, such as Social Security, pensions, and part-time employment.

Assessing Your Financial Situation: To understand your current financial standing, create a comprehensive inventory of your retirement accounts, savings, and investments. This will provide a clear picture of your progress toward retirement. Assess your risk tolerance using a questionnaire to make informed investment decisions. Based on your risk tolerance, construct an investment portfolio that may require rebalancing and modifying your investment strategy. For those willing to take higher risks, allocating a more significant portion to stocks may be appropriate, while those with lower risk tolerance may prefer a higher allocation to bonds and other low-risk investments.

Developing a Retirement Savings Strategy: After establishing retirement objectives and assessing your financial situation, it's time to formulate a retirement savings strategy. This involves utilizing various retirement account categories. Employer-sponsored retirement plans like 401(k)s and 403(b)s offer tax benefits and often include employer-matching contributions. Individual Retirement Accounts (IRAs), both traditional and Roth, are also valuable options. Taxable investment accounts can supplement retirement savings but lack the same tax advantages.

Determining Your Savings Rate: The next step is to determine your savings rate, which should ideally be at least 15 percent of your income. However, age, intended retirement age, current savings, and retirement income objectives may influence the required savings rate. Adjust your savings rate accordingly to stay on track with your retirement goals.

Life & Health Insurance: Insurance protects your retirement savings from unforeseen expenses. Consider investing in a health savings account (HSA) with a high deductible to cover rising healthcare costs. HSAs offer triple tax benefits and can be used for qualified medical expenses. Long-term care insurance is another option to safeguard against the high costs of long-term care.

Optimizing Social Security Benefits: Social Security benefits constitute a significant portion of retirement income. The age at which you receive benefits can impact the total amount received. Waiting until your full retirement age or even later can enhance your monthly benefit.

Estate Planning: Estate planning is vital to ensure your retirement strategy is comprehensive. It involves drafting a will, naming beneficiaries for your retirement accounts, establishing a power of attorney, and potentially creating a trust. These measures ensure your assets are distributed as desired and your wishes.

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Lynch Retirement Investment Group 2016, 2017, 2018, and 2019

John M. Lynch, CIMA®, CPWA®

John M. Lynch, CIMA®, CPWA® Managing Director – LRIG, Financial Advisor – RJFS

Andrew Fentress, CFP® Financial Advisor

Adam Tobin, CFP®, CRPC Customer Relationship Manager

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