Getting Ready for Retirement: Don’t Retire without Doing These Things First

By Chris Duderstadt

August 30, 2023

Getting Ready for Retirement: Don’t Retire without Doing These Things First

Key Points – Getting Ready for Retirement: Don’t Retire without Doing These Things First

  • Considering the Wants and Needs of Your Spouse as You’re Getting Ready for Retirement
  • What Are Your Income, Investment, and Tax Strategies?
  • Creating a Fluid, Forward-Looking Financial Plan
  • Building a Plan That Designed with Your Goals in Mind
  • 9 Minutes to Read | 23 Minutes to Listen

Are You Getting Ready for Retirement?

Retirement can be one of the most exciting times of your life if you plan for it. That “if you plan for it” part is critical. It can be hard for some people to believe that there’s more that they need to do to get ready for retirement than save, save, save. The goal isn’t just to get to retirement; it’s to get through retirement. We’re going to review some key things to think about as you’re getting ready for retirement.

1. Figuring Out What’s Important to You and Your Spouse

Sure, just the thought of retirement can feel great. But what are you going to do in retirement? As you’re getting ready for retirement, you really need to think about what’s important to you. What are your goals? Do you want to travel more? Do you want to buy a summer or winter home? When you’re no longer working, you’ll suddenly have a lot more time on your hands to accomplish your goals.

However, your retirement plan isn’t complete if your goals are the only goals you’re considering. You also need to consider the things that are important to your spouse. Even if you don’t have a significant other, do you have family and friends that you want to spend more time with in retirement? That’s almost always the number one goal for people in retirement.

“Doing it as a couple is critical because when we’re talking about discovering and prioritizing and really what’s important, we’re not talking about the money aspect. We’re not talking about the investments or the economy. We’re talking about your life.” – Dean Barber

If you’re married, it’s crucial for you and your spouse to be on the same page as you’re getting ready for retirement. We have something that can help you and your spouse with that. It’s our Retirement Plan Checklist, which consists of 30 yes-or-no questions about critical retirement considerations and an age-based timeline of things to keep in mind as you’re getting ready for and going through retirement. Download your copy below and review it with your spouse!

Getting Ready for Retirement

Retirement Plan Checklist

2. Having a Conversation with a CFP® Professional

No matter how well you and your spouse get along, there are going to be things big and small that you disagree on. How do you and your spouse find a middle ground when those situations arise? When it comes to financial planning and getting ready for retirement, reaching agreements with your spouse could be difficult. And that’s not necessarily a bad thing. It’s good that you’re both passionate about what you want retirement to look like.

Getting ready for retirement needs to involve a CFP® Professional that builds a goals-based financial plan that’s personalized for you and your spouse. If you and your spouse meet with a financial professional who immediately starts talking about investments, you’re not talking to a CFP® Professional. A CFP® Professional isn’t looking to sell you investments and understands that investments are just an engine that makes your plan work for you. A good CFP® Professional will be working alongside CPAs that review your plan from a tax perspective.

A CPA working directly with a CFP® Professional helps to ensure that our clients’ needs are met from a tax perspective. Not only should CFP® Professionals work alongside CPAs, but there should also be estate planning, insurance, and even investment professionals to support them and their clients’ visions. This is something we pride ourselves on at Modern Wealth. Getting ready for retirement is a team effort. We encourage you to get the ball rolling with that process by having a discussion with your spouse and a CFP® Professional about what’s important to you.

3. Understanding Your Income Sources

Next up on our list of things to do when you’re getting ready for retirement is understanding your income sources. How are you going to pay for your needs, wants, and wishes in retirement? You have your fixed income, which includes Social Security, pensions, and rental income. Your other assets could include your 401(k)s, IRAs, and brokerage accounts.

It’s important to be diligent about how much you’re saving as you’re getting ready for retirement. But understanding where you’re saving to and why it matters is just as important. How is your retirement income going to be taxed? If you have $1.5 million saved in a traditional 401(k), that’s great. However, you need to realize that you don’t actually have $1.5 million because your traditional 401(k) is a tax-deferred asset. That money won’t be taxed until you take it out. It’s all about what you have net after taxes.

It can be easy to blindly save as you’re working, especially since you have a salary and have insurance plans through your employer. But once you retire, you no longer have a set amount of income that you’ll be getting each week, month, and year. That’s why you need to have an income strategy in retirement. No one knows exactly how long their retirement will be, so this part is tricky. While there are various health risks that can shorten your life expectancy, longevity risk is very real as well. It’s critical to have an income strategy that takes you to and through retirement.

“Your income sources are going to be different than your neighbors, uncles, or friends. Don’t rely on them. Sit down with a CFP® Professional and analyze all your income sources so that you know where to take from, when and how much, make sure that you can keep up with inflation, and that it will last.” – Dean Barber

4. How Are You and Your Spouse Claiming Social Security?

Talking to your spouse about what’s important to each of you is just the beginning of couple’s retirement planning. Another aspect of why involving your spouse as you’re getting ready for retirement is claiming Social Security. If you’re wanting to claim your benefit as soon as possible at age 62, what’s your reasoning? If you’re just claiming ASAP because you want the income, hold on for a second.

Remember that as you’re creating your retirement income strategy, you’re not just doing so for one or two years. When you’re claiming Social Security, you’re trying to maximize the benefit for you and your spouse over your lifetime. And the longer you delay claiming Social Security, the bigger the benefit.

“Most people don’t know that there are over 600 iterations of the way you can pull income out of Social Security. How you pull it out will be critical to how much success that you’re going to have in the future.” – Bud Kasper

5. Creating a Multi-Year Tax Strategy

Again, if leaving a legacy is important to you, your income strategy needs to go beyond your life expectancy. Along with thinking about how you’ll be affected by the tax implications of your retirement income, consider how your loved ones will be impacted if you’re leaving them an inheritance.

We mentioned how a traditional 401(k)/IRA is tax-deferred. On the other hand, a Roth 401(k)/IRA growth is tax-free. That means that you’re paying the tax up front, but you’re getting tax-free growth and tax-free distributions with the Roth. So, in years when you might have more income, a Roth conversion might make sense so you can take advantage of the tax-free growth when you need income down the road.

Also, it’s crucial to compare today’s tax rates to future tax rates as you’re getting ready for retirement. Did you know that tax rates will go up in 2026 if Congress doesn’t make changes between now and then? The Tax Cuts and Jobs Act is scheduled to sunset on December 31, 2025, which means that we’ll revert to the higher rates from 2017. So, by doing a Roth conversion now, you would be paying that tax at a lower rate today and paying it at a higher rate if you don’t do anything between now and 2026.

Building a multi-year tax strategy involves a CPA that works alongside a CFP® Professional to review your plan from a tax perspective. A good CPA will try to minimize your taxes over your lifetime, not just in one year.

“Fortunately, Dean recognized the importance of that years ago with having CPAs involved in the financial planning process here. It lifted the quality of what we’re trying to accomplish significantly.” – Bud Kasper

6. Creating a Spending Plan for Retirement

Notice that we started right off the bat with discussing your retirement goals but not mentioning anything about money. Defining your ideal retirement lifestyle is the first step to getting ready for retirement. But once you’ve outlined what you want to do in retirement and have a complete understanding of all your retirement needs, you need to create a spending plan. In other words, it’s time to make a budget for retirement, but creating a spending plan sounds more enjoyable.

What are your regular expenses? Those could include food, car payments, mortgage payments, etc. Health care costs are also essential to incorporate into your spending plan. Keep in mind that they inflate higher than your regular expenses, so you’ll need to apply a higher inflation factor to your health care costs.

Then, you have your occasional expenses. That’s where some of your goals like vacations and second homes can come in. They’ll also include things like cars, A/C units, etc. that need to be replaced over time. All those expenses are going to vary depending on your unique situation.

If you said earlier that your family is important to you, you’ll likely want to incorporate legacy planning into your spending plan. Knowing that your loved ones are in good hands financially can bring you peace of mind later in life. Remember that you don’t have to give with cold hands either. You can set up your spending plan in a way where you can gift money to your loved ones or charity while you’re still living. Start thinking about that now as you’re getting ready for retirement because life is short.

“When you create that spending plan, you back up to the multi-year tax strategy and understanding your income sources. These are kind of all tied together.” – Dean Barber

7. What Are Your Insurance Coverages?

While 62 is a milestone age during the retirement planning process thanks to Social Security, 65 is also a very important age for its own reasons. So many people think that they can’t retire until 65 because that’s when they become eligible for Medicare. Well, if that’s the only reason you’re waiting to retire, have you done some of the previous steps? Maybe you have enough retirement income and can afford to go to the marketplace or elsewhere for health insurance. Just know that you do have options and that you might not need to keep working.

Obviously, health insurance is one of many insurance coverages. Are your other insurance policies up to date? That can include property and casualty insurance, home insurance, car insurance, etc. Are you planning to carry life insurance into retirement? There are pros and cons to doing so, but it depends on your situation as you’re getting ready for retirement.

“Understand your insurance coverages—and I mean all your insurance coverages. Health issues, catastrophes, premature death are all things that can derail the spending plan and the ideal retirement that you and your spouse have set out.” – Dean Barber

8. Creating a Financial Plan That’s Fluid and Forward-Looking

As you and your spouse are getting ready for retirement, keep in mind that your needs and goals are going to change as you go through retirement. Ideally, you’ll both have great health and have very fulfilling retirements. Unfortunately, we know that isn’t always the case, though.

This is why it’s critical to plan for things such as a long-term care stay or unexpected death of a spouse as you’re getting ready for retirement. Is that fun to think about? Of course not. But if something were to happen to you, you would want to make sure that your spouse will be OK. We’re guessing that your spouse would want you to be taken care of if something happened to them as well.

Getting ready for retirement is really all about controlling what you can control. We briefly touched on applying a higher inflation factor to things like health care earlier. While we can’t control times of high inflation like we’ve been through, we can plan for it. When you’re building your financial plan, you can stress test it for events such as high inflation, a big market downturn, or unexpected health care expenses.

Stress testing doesn’t just deal with negative things either. If you want to take a fun trip or help pay for your grandchild’s education, put it into your plan. How did it impact your plan’s probability of success? If it made you more uncomfortable than you’d like, what trade-offs can be made so that you can still achieve your goals? If you stress test for all that as you’re getting ready for retirement, that can alleviate the concern of financial stress throughout retirement.

We Can Help You with Getting Ready for Retirement

There is so much to consider as you’re getting ready for retirement. That’s why you need to start planning for it—ideally 10-15 years prior to when you want to retire. Our team of professionals is ready to help you with that. We want to build a plan that’s unique to you and your spouse. So, let’s start going through these steps that we’ve outlined.

Once you’re ready to talk with one of our CFP® Professionals, click here. You can schedule a 20-minute “ask anything” session or complimentary consultation. We can meet with you in person, virtually, or by phone—whatever setting works best for you. We’re excited for the opportunity to help you start getting ready for retirement.

Getting Ready for Retirement: Don’t Retire without Doing These Things First | Watch Guide

00:00 – Introduction
01:10 – Approaching Retirement
02:30 – 1) Figure Out What Is Important to You and Your Spouse
05:34 – 2) Talk to a CFP® Professional
07:36 – 3) Understand Your Income Sources
11:29 – 4) Have a Strategy for You and Your Spouse to Claim Social Security
13:45 – 6) Build a Multi-Year Tax Strategy (Dean went out of order)
15:25 – 5) Create a Spending Plan
19:15 – 7) Understand Your Insurance Coverages
21:33 – 8) Create a Financial Plan that’s Forward-Looking and Fluid
22:35 – What We Learned Today


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Investment advisory services offered through Modern Wealth Management, LLC, an SEC Registered Investment Adviser.

The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.