6 Basic Steps on Retirement Planning

The years have a way of getting away from us. We all know we have to plan for retirement, but our plans to make those plans are often delayed simply because life is happening. 

We’re busy working and raising families, watching kids grow up, and doing our best to be good providers of the things our families need. And just when you think things are finally settling down, something new is happening—a graduation or perhaps a wedding. 

Now it’s time to take an honest look at what you’ll need for your retirement, and not just in regard to money. Retirement planning encompasses all aspects of your continuing well-being, and it considers your legacy as well. 

To prepare for an enjoyable retirement, you’ll need to follow 6 key steps. 

Step 1: Optimize health coverage

Healthcare costs are a concern regardless of age, but if illness or injury strike near or during retirement, the costs can be difficult to recover from simply because there’s less time to pay for your expenses through earnings. For this reason, it’s important to have a health plan in place that can help cover the larger expenses. 

Fortunately, there are more options available now. You can often choose a traditional health insurance plan that is ACA-qualified, which means it meets Affordable Care Act requirements, but you have other options as well. A short-term policy can cover those in-between times and some plans are even available for a full 12 months. 

You can also become a member of a healthshare organization. These are faith-based, sometimes non-denominational, and usually more affordable than traditional health insurance plans. As the name suggests, healthcare costs are shared among the members, with members making contributions instead of paying premiums. 

Step 2: Assess disability risk

If you’re still working, be sure to consider what would happen if you were suddenly no longer able to work. What would your retirement look like if your income suddenly stopped due to an injury or illness? 

Step 3: Plan for retirement income

The first part of planning for retirement income is to understand what your basic monthly expenses will be. You can look at your current expenses as a guide, subtracting the expenses that will go away when you’re no longer working. To be fair, you’ll have to add in new expenses that may arrive, like more leisure time or travel expenses. Golf club memberships aren’t free. 

You might have some savings already tucked away in a 401k or IRA. You might also have some equity in your home or some savings in the bank. Investments can change in value, sometimes dramatically, and these changes in value can change your retirement plans as well. 

Leading up to 2008, many people thought housing and equity markets would never stop going up. Unfortunately, markets go down as well. There are ways to shield yourself from market risk though. 

Lifetime income annuities are among the ways you can receive guaranteed income in your retirement years rather than dwindling your retirement savings—and possibly reaching zero.

Step 4: Plan for long-term medical costs

We all know healthcare is expensive. As you get older, there’s a chance you or your spouse may need long-term care. Nursing home care becomes a necessity in some cases, and the cost can be over $80,000 a year in many areas.

Medicare doesn’t cover long-term care, and Medicare supplements won’t help in this case. Nursing home or custodial care will have to be self-funded unless you purchase a long-term care insurance policy. If you purchase a policy sooner rather than later in life, the monthly cost is much more affordable.

Step 5: Create a living will

A living will is a document detailing your wishes regarding medical treatment. In many cases, a sudden illness can leave you unable to express informed consent. Your living will can guide doctors in regard to which procedures you do or don’t want performed. Make sure that your family members are aware of your living will and that they can find it if needed.

Step 6: Legacy planning

As part of retirement planning, everyone should have a will. The alternative is that the state will decide how your property is divided. Experts now recommend you revisit your will every 5 years to be sure it still meets your needs. Estate and death taxes vary by state, so if your estate is significant, you’ll want to discuss your specific situation with an estate planning expert.

Planning for retirement only requires a handful of basic steps, but each step has special considerations depending on your unique situation. The one thing we all have in common is that the sooner we start planning for retirement, the more prepared we’ll be.

Click here to schedule an appointment, or call 800-913-0172 to get started.    

To your health and wealth,

Wiley P. Long, III
President - HSA for America

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