The Retirement Planning Process Answers the Question 'Can I Retire?'

Those events may cause me to get a rain check or miss the first part of the game; obviously resulting in my “plan” not working to perfection. So I can either change my tee time to miss the rain, or if I get behind, I could have the game recorded—adjusting my plan based on the ongoing facts, situation and future possibilities through risk management. The challenge comes in that I just don’t know what’s going to happen until I actually play.

The retirement planning process is no different. The shorter the time between starting to plan and retirement, the more direct correlation to a higher probability that potential risks will keep an investor from actually meeting their retirement goals. The longer the time between starting to plan and retirement always results in a lower probability that potential risks will keep an investor from meeting their retirement goals. The plan is not perfect, but it is the ongoing planning process that makes it perfect.

Planning Process #3: What Should a Real Retirement/Financial Plan Encompass?

Many investors believe that a retirement savings plan such as a 401(k) IS a retirement plan. Or that online investment growth projections about how much their savings will grow over time, with an assumed average rate of return, is a retirement plan. Sadly, these are usually the investors to whom I have to give bad news when they ask me, “Can I retire?”   

Here’s what a comprehensive retirement/financial plan should involve at a minimum:

• Assumptions on:
• Current income
• Inflation rates
• Investment growth rate
• Current and future assets/liabilities
• Investment contributions/savings
• Company match
• Asset allocation strategy
• Detailed year–by-year cash flow projections until at least age 90
• Estimated year-by-year income tax projections
• Analysis of:
• Life insurance risk
• Disability insurance risk
• Long-term care insurance risk
• Wills and trust
• Estate tax/inheritance tax
• Retirement income
• Pensions
• Social security income
• Investment income
• Health/medical insurance projections
• Future big purchase goals analysis

Once all these items are taken into consideration, then answers and recommendations on ways to prudently achieve a client’s goals, if possible, become evident. If these considerations are not included in an investor’s plan, then the investor isn’t really prudently planning for retirement.

Retirement planning is a process of long-term preparation using short-term information. A prudent, ongoing process is what allows investors to retire when they want. If they don’t have that process intact, most will ask the question, “Can I retire?” and get an answer they don’t want to hear.