Retirement Readiness Checklist: 5 Steps to Prepare for the Next Chapter

Retirement Readiness Checklist: 5 Steps to Prepare for the Next Chapter

In this conversation, Victoria and Erin Kennedy break down a simple, 5-step checklist to help you prepare for your next chapter:

Define what retirement actually looks like for you
Take stock of your financial and personal assets
Prioritize your health (it affects more than you think)
Build a realistic retirement budget
Decide when to claim Social Security

The earlier you start planning, the more freedom you have to actually achieve your goals. If you'd like to talk with Victoria to start building a retirement plan that aligns with your life, not just your balance sheet, feel free to give her a call at 941-413-0331.

Transcript:

Erin Kennedy 00:06
Victoria, so good to see you. Today we are sharing our retirement readiness checklist. We have
five steps to help everybody prepare for the next chapter. So start planning now for the lifestyle
you want and what you will need financially to get there. Step number one, love it. Define your
retirement. This is not about your budget. This is your bucket list. Why is this step number one?

Victoria Larson 00:28
Yeah, actually, Erin, I would start even beyond that. It is. I agree with you. It is not your budget. I
would start with the basics of how are you going to spend a typical Tuesday?

Erin Kennedy 00:06
Yeah

Victoria Larson 00:40
Yeah. I mean, are you going to go to the gym? Are you going to be volunteering? Are you going
to be watching the kids that day? Start looking at how you're going to fill your day. The second
thing I would encourage folks to do is think about where you're going to live. Are you going to be
downsizing your home? Are you wanting to move to a state where there's no state income tax,
or you're going to be wanting to live closer to where your children, grandchildren live. The third
thing I would encourage folks to do is you know what you're retiring from, but what are you
retiring to? Right. Your job does quite a few things for you. First, it gives you a paycheck, and for
the folks that are retiring, you've probably already figured out where that's coming from. But it
also provides you with structure, community, and a sense of purpose. And when you retire,
those all four are critical for those that are going to enjoy retirement. People are not so
concerned about running out of of money in retirement, they're more concerned about what am I
going to do, right? I think that one's often overlooked. Okay, number two, this one is a little bit
related. Take stock of your assets beyond your bank account and retirement assets. You
suggest writing down your passions and unique assets, and then maybe think about how they
could generate part-time earnings in retirement. Absolutely. I mean, folks come to us, and
absolutely understanding where your assets are-the traditional financial-is very important. So
put that on one page: your 401k's4, 100 3b's4, 50 sevens, pensions, rental income, etc. Then
on the other, write what you know how to do. What are your skills? Who's in your network?
What are you known for? If you were, for example, a teacher, you might find that tutoring
provides you with joy in retirement. Or let's say you were an accountant, and now you might do
a little bit of bookkeeping for some small businesses in the chamber that does a couple things
for you. One, it gives you that purpose, but it also can bring a little extra income that affords you
the opportunity of delaying Social Security or putting less pressure on your retirement accounts.

Erin Kennedy 02:56
Right, really good point. Number three, evaluate your health. Healthcare is often one of your
biggest expenses in retirement. So work now to get or stay healthy.

Victoria Larson 03:07
Right. We often say, like, without health, you have no wealth.

Erin Kennedy 03:11
Yeah.

Victoria Larson 03:11
So start with the basics. Get that physical. Get that regular lab work done. It is far less
expensive to manage and monitor your health than it is to take care of it if you become ill. So
definitely take a proactive approach there. The second thing: let's say you retire at 62, Medicare
starts 665. So you really need to think about what those costs for that insurance, that gap period
is going to cost you on an annual basis, and plan for that. The third thing I would encourage
folks to do is to think about what your long-term care plan is going to be. Fidelity just came out
with a recent study that said if you make it to 65, a husband and wife has an 80% chance that
one of you will need care, and care is extremely expensive. And there's some long-term care
insurance opportunities that are available that can really help you leverage and protect your
retirement dollars. All

Erin Kennedy 04:17
right. Step number four: create a retirement budget. So I hear the word budget a lot. What does
this mean exactly?

Victoria Larson 04:24
Right. Well, actually, I tell you, when we talk to folks that are still working, and I ask that
question, it's like getting deer in the headlights back at me. Going, the money comes in, we pay
all of our bills, and we have money left over. So when you're working, you really don't have to
think about that so much, and now in retirement you have a finite amount of money, and we
don't want to get that wrong. So I encourage folks to do two things. Right on the left side, I
would encourage you to put down what are your basic expenditures to manage your household
repair costs, utility. Car insurance, health insurance, cell phone-all of those are the basic
expenditures. On the right, put down your aspirational expenses. That's the dining out, the
travel, country clubs, golf memberships. So you have a clear understanding of what it costs to
live your lifestyle. The second thing I would tell folks to think about is that your retirement isn't a
straight line of expenses. If you listen to other of our podcasts here, we've talked about how the
first 12 years that really should be your go-go years, your healthiest years. So maybe we front-
load more of those aspirational expenses. Second phase is the slow go years, and then the no
go years. Kind of take that into consideration when you're planning out your budget. Third thing
is that this may be the first time where you're responsible for paying the taxes, because while
you're working, your employer's taking money out of your paycheck each period to set aside
money for taxes. Now that you're retired, you may have to be planning for quarterly payments
on those tax bills. Last part of this is to consider that if you need $100,000 this year, while taking
into consideration inflation, in 30 years you would need about 200 or more adjusted for inflation.

Erin Kennedy 06:23
Yeah, inflation silently for the night. Last step, as we speak of our budget, determine when to
claim Social Security. This is one of the most important decisions you will make in retirement.

Victoria Larson 06:35
Yes, it absolutely is. Your Social Security is one of your biggest assets, and it needs to be
actively managed accordingly. For most people retiring now, their full retirement age is 67.
They'll get their full Social Security benefits. If you elect to take it early, you'll see here that you
would receive 70% of those benefits. That's a 30% pay cut. To contrast, if you wait to 70, you
get an extra 24% So those are big swings. So you need to take into consideration your health,
whether or not it's a husband and wife, and how we're going to optimize Social Security over
two individuals, and what are your other income sources? So the bottom line message here is
that you want to really give this consideration, thought, do some analysis before pulling that
trigger.

Erin Kennedy 07:33
You know, I always really enjoy speaking with you, Victoria. It's clear that this is so much more
than just a financial equation. I really love that you're always thinking about the emotional
component too that goes into retirement, which I think a lot of people overlook. So, if somebody
would like to sit down and work through this checklist with you, see if they are ready for
retirement, what's the best way to reach you?

Victoria Larson 07:53
They can contact us at info@vitalityinvestments.org.

Erin Kennedy 07:58
Perfect. Again, Victoria, thank you so much for your time today. I really appreciate it.

Victoria Larson 08:01
Thank you.