What is a retirement plan? What should a well-written retirement plan do for you? What 5 questions should it answer? Can you adjust a retirement plan? In this episode of Retirement Made Easy, I talk about the importance of planning ahead for retirement. The sooner you have a retirement plan in place, the better. Listen to find out why it’s so important! 

You will want to hear this episode if you are interested in...

• [0:22] The importance of planning ahead
• [2:26] The two best books on retirement
• [4:52] What is a retirement plan?
• [8:26] Adjustments you can make leading to retirement
• [9:33] The 5 questions a retirement plan answers

What is a retirement plan?

Many people want to know if they’re on track for retirement. A retirement plan looks at where you are currently with the resources that you have. It will make assumptions and project your future retirement. Your retirement plan will help you determine if there are changes you need to make or if it’s smooth sailing ahead. The sooner you can get a retirement plan completed, the better. If you wait until the last minute, a financial planner might find gaps in your plan—that could’ve been filled years before. 

It breaks my heart when people are excited about retirement, only to find out that they can’t afford the retirement that they had dreamed of. I find myself thinking, “I wish they had come to me years ago.” No one wants to hear that they have to live on less or delay retirement. Doing your retirement plan earlier (5+ years early) allows for adjustments to be made leading up to retirement. 

Adjustments you can make leading to retirement

What adjustments could be made to your retirement plan that could change the trajectory of your retirement? We could max out your HSA or could increase your contributions to your 401k. We could come up with a strategy to pay off your house prior to retirement. We could adjust the risk you’re taking with your investments. There are endless adjustments that can be made to your retirement plan—when you have the time. On the doorstep of retirement is NOT that time. 

The 5 questions a retirement plan answers

1. Are you on track to meet your retirement goals? If you’re behind, you have to pick up the pace and make some changes. If we adjust your goals, we can work to help you retire on time.
2. How much will you be able to live on in retirement? The answer to this question depends on how much money you want to live on in retirement. If you could live on $500 a month, many people could retire today. If you need $5,000–$10,000 a month you need a retirement plan to answer that question. 
3. How long will your money last? No one wants to outlive their resources. Many Americans are afraid they’ll run out of money. Your retirement plan can help you determine how long your money will last. Unfortunately, many people work longer than they should because of that fear. 
4. What rate of return do you need your money to make? Knowing this is extremely important. Let’s say your plan told us that you need a 2% rate of return for 30–40 years. But what if I presented a plan to your sibling that said they needed a 9% annual return for 30–40 years to retire successfully? Wouldn't you want the first plan? That would tell you that you don’t need the same risk to have a positive outcome. 
5. When can you retire? Is it 6 months from now? Is it age 65? Or 70? Your plan will use conservative assumptions to answer this question. It’s not set in stone. If the plan says you can retire at 65, it’s based on today's information. As the years go on and you get closer to retirement, you’ll want to reevaluate where you’re at and revise your plan. Your retirement plan is clay that can be remolded. 

Contractors don’t build a house without a plan. They would never operate without a blueprint—the outcome that they’re looking for. It needs to be the same for retirement. Listen to the whole episode for more information!

Resources & People Mentioned

• The New Retirementality by Mitch Anthony
• Simple Wealth, Inevitable Wealth by Nick Murray

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
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