facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
How to Retire: Checklist for a Successful Plan Thumbnail

How to Retire: Checklist for a Successful Plan

This article was published in the October 2023 issue of the Traverse City Business News and can be read in its entirety below. Black Walnut Wealth Management contributes articles and is featured in various media outlets.

It’s never too early (or late) to plan for retirement, but it can be overwhelming to know where to begin, so here’s a checklist to get you started. 

Review assets and debts

The first step is evaluating where you stand financially. Create a net worth statement of what you own (assets) and what you owe (debts). Deduct debts from assets to determine your personal net worth.

  • Assets: bank accounts, value of investment accounts, vehicles you own, market value of your home, valuable possessions (jewelry, art)
  • Debt: mortgage, car and student loans, credit card balances


Begin paying off debt

Your income in retirement may be lower, so address debts now. Focus on those with the lowest balance or highest interest rates. Create a mortgage payoff plan, which may take a few years to complete. Certain types of debt – personal loans, credit cards, auto loans – have higher interest rates and lack potential tax benefits. Pay these off before you retire, since they cut into savings and reduce your standard of living.

Increase cash reserves 

Ideally, have at least two years of living expenses in reserve by retirement, separate from your diversified portfolio. Cash on hand helps you sleep well at night, and if the market falls, you won’t have to liquidate securities at a loss.

Determine income needs 

Consider your retirement housing, healthcare and lifestyle expectations. New hobbies? Extensive travel? A second home? Healthcare is unpredictable and expensive. Learn about Medicare Parts A, B and D, Medicare Advantage and Medigap supplemental insurance. Evaluate whether long-term care insurance is a good fit to help cover the costs of nursing home care, an assisted living facility or at-home assistance.

Review income sources

Familiarize yourself with Social Security and determine the right time to begin withdrawing. Monthly benefits depend on total earnings, birth year, and the age you claim benefits. Minimum age is 62, but you may decide to wait in order to maximize your monthly benefit. At what Social Security considers your full retirement age (FRA), you may claim your full monthly benefit. This is reduced up to 30 percent if claimed before FRA. Conversely, waiting beyond FRA to claim increases your projected benefit by approximately 8 percent each year. The longer you wait, the higher your benefit, though you must claim it at 70.  

If you have a pension, determine whether a lump sum distribution or monthly payments will work best for you and, if you're married, your spouse. 

Examine your investment portfolio. You’ll want a balanced, diversified mix of growth and income in order to keep up with inflation over the long term. The rule of thumb is to assume 4 percent annual earnings.

Account for tax planning

Review how tax-deferred accounts (401(k)s, IRAs, Roth accounts, taxable accounts, social security and pensions will affect your overall tax picture. Examine how to best manage them to have the least effect on your taxes.

Could a partial Roth conversion or other IRA withdrawal strategy save on taxes in lower-income years (post-retirement but prior to Required Minimum Distribution age and/or claiming social security)?

Look into health savings accounts. In addition to reducing taxable income, contributions grow tax free, and qualified withdrawals aren’t taxed. At 65, you can withdraw funds as with a traditional IRA.

Consider continued employment

You may need to work longer than you think or work part-time after retirement.  If this will hold off spending down your retirement account, it’s worth contemplating.

Things to consider:

  • Will it allow you to delay claiming Social Security, resulting in a higher benefit?
  • Are you still eligible for employer health insurance, and what are the implications of starting with Medicare?
  • Will working longer affect your pension?
  • Can you make more contributions to your Health Savings Account balance by working longer?

The Importance of Professional Advice

Working with professional advisors during retirement helps you make informed decisions that could have a significant impact on your financial situation. Start with a fee-only certified financial planner™ (CFP) who is held to a fiduciary standard. A trusted professional who works in your best interest can prepare your family for the many joys of retirement. 

Recent Insights from Black Walnut Wealth Management