Make A Plan With These Five Factors In Mind

By |2020-04-17T18:09:13+00:00February 16th, 2019|Retirement Planning|

Like the old song says “Time is on your side,” or is it?

The biggest question everyone has about retirement is how much income they’ll need each month. This curiosity stems out of how most people live in their pre-retirement years—living off of salaries, commissions and bonuses, and spending most of what they make each month. When retirement hits, those paychecks and benefits will most likely cease, couples aren’t able to live off of Social Security alone, and very few Americans have guaranteed pension. It’s vital to take steps in preparing for an income that will help allow for the life that one wants to live during retirement.

#1 Mortgage

Mortgage payments are often the most significant bill a person is going to pay each month. According to a study done in 2018 by Transamerica Center for Retirement Studies, 49% of Baby Boomers stated they were paying on a mortgage each month. Owning a house is an asset; it’s how that asset is utilized is the key.

If you are close to retirement, and still holding a mortgage, there are 2 ways it can be handled—work to pay off the mortgage so that money can be allocated elsewhere during retirement or build a retirement plan around the mortgage payment, knowing there will be less money for travel, a new car, and eating out. Developing a retirement budget will shine a light on what option is the best option for each person.

Questions to consider:
1. If I didn’t have a mortgage payment, what would I be doing with that money?
2. Will I need to downsize to have the retirement I want?
3. If I don’t stay in my current hometown, where do I see myself moving?

#2 Travel

Traveling can be very enticing for retirees, and it’s important to take some time before retirement to visualize how big of a role you want traveling to play in the overall retirement picture. In the same study by the Transamerica Center for Retirement Studies, traveling (70%) is workers’ most frequently cited retirement dream. From visiting family or old classmates to soaking in historical sites, the options are endless when it comes to travel. Most couples know they’re going to travel a lot more at the beginning of their retirement compared to later when they’re older. A retirement budget should reflect that. In the same way, each person needs to think of how many trips they want to take each year so they can see if their retirement budget will support such a number.

“Hoping to travel” is not a strong enough plan for retirement; traveling must be a category in an income plan that is created in the pre-retirement years.

Questions to Consider:
1. Are there any bucket list trips we’ve always wanted to do?
2. Are there family and friends that we haven’t had enough time to visit?
3. How often do we hope to travel each year?

#3 Automobiles

Having a car payment or not is all a part of the debt conversation couples need to have when looking towards the future. While it doesn’t seem like a car is a huge decision when it comes to retirement, many couples are faced with a decision to make.

If you are retiring from a job that has provided a company car where the expenses have been covered, replacing that car will add an expense where there was none. If you have been driving a car for an extended period, it may be time to upgrade so there is a dependable car to last through the retirement years. The problems arise when couples want a new car, go out and buy their dream car for retirement, and they fail to see the repercussions of that payment on their retirement income. More often than not, spending less on a less expensive reliable car can offer financial freedom in other areas of retirement.

Questions to Consider:
1. How will a payment affect my overall retirement plan?
2. If we don’t need a car now, when will we need one?
3. Does buying a car require having payments or will we pay cash?

#4 Trusts and Wills

One of the topics we often approach with our clients is making sure their estate is in order. Setting up a trust or a living will help control assets and leave a legacy when gone. It’s counterproductive to spend money on something when it may not be the best approach concerning a comprehensive retirement plan.

Having this portion of retirement planning adequately set up will save families thousands of dollars and will even help prevent an estate going into probate which at times isn’t resolved for over two years.

It’s essential to understand what need exists for each person in this area, so all issues are resolved before it’s too late.

Questions to Consider:

1. If and when we pass away, where will our money go?
2. What can I do now to lower the tax burden for our beneficiaries?
3. When was the last time we updated our trust or our will?

#5 Life insurance

Whenever I talk with my clients about life insurance, I always begin by asking them this question—what needs can be fulfilled with some sort of life insurance? We talk “if” it’s necessary, but the focus is always how it can fill a gap. Life insurance is not just another payment to have, but it is a risk management tool for a secure financial future.

According to Forbes magazine, the four common and most beneficial roles life insurance can play are retirement income, non-market correlated asset, a pension maximization strategy, and for long-term care planning.

Life insurance offers a certain level of security and confidence to a retirement plan that no other investment can. Even though it’s not a subject many choose to discuss, it is an essential piece in having a secure retirement.

Questions to Consider:
1. If we have life insurance, what is the reason for having it and does it effectively solve those issues?
2. Are our old policies effective and are they the most efficient forms of insurance for us during retirement?

Don’t allow time to get away and these five essential steps to slip through the cracks. Analyzing how each of these topics fit into your picture of retirement will provide peace of mind and allow you to focus on enjoying your Golden Years instead of being a weight on your shoulders.

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About the Author:

Shon has spent the past 18 years in the retirement planning industry in the Pacific Northwest, where he finds great joy in helping clients protect their retirement assets while building their financial legacies for future generations. Shon holds insurance licenses in Washington, Oregon, Idaho, and Montana. Website:

Office: (509) 822-3603 | Cell: (425) 492-7219 | Retirement +