Top 5 Financial Planning Considerations

By Chris Duderstadt

January 10, 2024

Top 5 Financial Planning Considerations

Key Points – Top 5 Financial Planning Considerations

  • Building a Forward-Looking Financial Plan
  • How to Factor Inflation into Your Plan
  • Yes, It’s Still Important to Have a Budget in Retirement
  • Tackling Taxes Before and After Retirement
  • 7 Minutes to Read | 24 Minutes to Watch

Top 5 Financial Planning Considerations

We’re still in countdown mode after watching the ball drop in Times Square on New Year’s Eve. Today, Dean Barber and Bud Kasper, CFP®, AIF® are going to count down our top five financial planning considerations. Let’s do a quick rundown of these five financial planning considerations before covering each one in depth.

  • 5. Start with the end in mind.
  • 4. Be conservative when you apply an inflation rate to your plan.
  • 3. Work on a firm and realistic budget.
  • 2. Always plan from a net perspective.
  • 1. Cover your basics first.

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5. Start with the End in Mind

This is arguably the most important financial planning consideration. While starting with the end in mind is No. 5 on our list, we want to lead off our countdown with it to really drive home the points of the other financial planning considerations.

Before you start trying to figure out how much you need to retire, you need to outline your goals for retirement. If you’re not building your financial plan around your needs, wants, and wishes in retirement, you’re not going to get an accurate answer to how much you need to retire.

“Building a retirement plan is like putting together a jigsaw puzzle. When when you put together a jigsaw puzzle, the most important piece is the box because the box has the picture of what it is that you’re trying to put together.” – Dean Barber

Thinking about your needs, wants, and wishes in retirement requires you to step into the future. What do you want your life to look like in retirement? What are the things that are most important to you and your spouse? Do you think the answer to that now will be the same in retirement?

Those are questions that shouldn’t just be answered on a whim. They need to be thoroughly thought through, as do all the questions within our Retirement Plan Checklist. Our most popular white paper consists of 30 yes-or-no questions and age-and date-based timelines of various financial planning considerations. Make sure to download your copy below!

Financial Planning Considerations

Retirement Plan Checklist

What Will Your Spending Look Like in Retirement?

When we take people through our financial planning process, the first thing we do is take them through a prioritization exercise. What are the most important things to you? Is it spending time with your family? Traveling? Leaving a legacy? We’ll take you and your spouse through that exercise separately and then figure out what is most important to you as a couple.

While it’s important to start with the end in mind when going through the prioritization exercise, remember that your goals and circumstances in your life are going to change as you approach and go through retirement. It tends to make sense to try to live a more active lifestyle in the first 10 years or so of retirement because eventually our bodies will slow down. This is why we encourage people to front load their spending in retirement and do those things that you’ve always wanted to do.

“The earlier you start planning, the better off you’re going to be and the higher degree of probability of making those things happen.” – Bud Kasper, CFP®, AIF®

Hopefully you’ll still be in good health after those first 10 years or so of retirement, but chances are you might want to slow down a little bit compared to the beginning of retirement. As you’re building your spending plan for retirement, you’ll also want to factor in health care costs. The costs of long-term care continue to rise, so if you or your spouse requires a long-term care stay at some point, you’ll want to make sure that it’s built into your plan.

4. Be Conservative When You Apply an Inflation Rate to Your Plan

Speaking of health care costs continuing to rise, that brings us to our next financial planning consideration. It’s critical to be conservative when you apply an inflation rate to your plan. We’ve had several people come to us over the years thinking that they had the perfect financial plan built out.

We’ve commended those people for being proactive and building a plan but guess what one of the most common problems is that we’ve seen with those plans? Many of them either didn’t incorporate an inflation factor to their plan or only applied an inflation factor of 1% or 2%. That might have worked OK a few years ago, but what about when inflation soared in 2021, 2022, and 2023?

This is why we apply an inflation factor of about 4% when we’re building out someone’s financial plan. Why 4%? Because that’s the historical average rate of inflation over the past 40 years.

“If you really want to make sure that your plan allow you to maintain your lifestyle in retirement, plug in a little bit higher inflation rate—maybe 4.25%—and see what happens. Then, understand what your cash flow is going to look like in the future.” – Dean Barber

It still gets a bit more complex with inflation as a key financial planning consideration, though. Let’s circle back to the substantial costs of health care for a minute. The costs of health care have been inflating at a much higher rate than the goods at the grocery store and other daily expenses. That being said, it’s important to inflate those health care costs within your plan separately. Rather than inflating health care costs at 4% when we build out financial plan, we inflate them at about 6.5%.

3. Work on a Firm and Realistic Budget

If you just saw the word “budget” and cringed, you’re probably not alone. After saving and saving and saving for retirement, a lot of people think that they’ll no longer need to have a budget in retirement. That’s simply not the case, though. And we hinted at that while discussing the fifth point in our countdown of financial planning considerations.

Rather than thinking about having a budget in retirement, think of it as having a spending plan.

“When we say budget, don’t think of it as a dirty word.You could refer to it as a spending plan. What do you plan on spending?” – Dean Barber

After you determine what your initial needs, wants, and wishes are going to be for retirement, how much are they going to cost? Since you’re no longer going to have a paycheck in retirement, what assets do you have to fund your objectives?

Determining When to Claim Social Security

When you turn 62, you’ll be eligible to begin claiming Social Security. However, claiming it when first eligible might not be in your best interest. Again, you need to start with the end in mind. When you and your spouse are deciding when to claim Social Security, you need to determine how to maximize your benefits over the course of retirement. The longer you put off claiming Social Security, the larger your benefits will be when you claim them.

Of course, Social Security is just one income source to keep in mind as you’re making financial planning considerations. Do you have a pension? How much have you saved to your 401(k) or have in IRAs? Maybe you have some real estate income. There are rules associated with each income source that you need to understand, especially when it comes to taking money out of certain accounts.

2. Always Plan from a Net Perspective

That leads us right into our second financial planning consideration—always plan from a net perspective. By the time you reach retirement, your largest asset will likely be your 401(k). Let’s say that you’ve saved $1.5 million in your 401(k). That’s great, but it’s critical to understand that you don’t actually have $1.5 million.

“When you start planning from a net perspective, you really start to understand the impact of creating that long term forward-looking tax strategy to help you get that money net the net net amount that you want into your checking account with the least amount of tax possible.” – Dean Barber

When you’re contributing to a traditional 401(k), those contributed are being made on a tax-deferred basis. That means that you won’t be taxed on it now, but when you will be when you take the money out.

Roth vs. Traditional

However, if you make contributions to the Roth side of your 401(k), there are different rules that apply. You’ll be taxed up front when making the contribution, but all your earnings will accumulate tax-free. That’s why it’s so crucial to plan from a net perspective. We don’t want you to be knocking on retirement’s door and thinking you’re all set only to not realize that most of your retirement savings haven’t been taxed yet.

So many people have the approach of trying to pay the least amount possible in taxes each year. Those people aren’t starting with the end in mind, though. A forward-looking can tax plan generate a substantial amount of tax savings over your lifetime.

Forward-looking tax planning requires you to think about tax rates today compared to what they will be in the future. Well, we know that on January 1, 2026, tax rates will be going up unless Congress takes action. That’s because the Tax Cuts and Jobs Act is scheduled to sunset on December 31, 2025, which means we’ll revert to the higher tax rates from 2017.

Utilizing tax planning strategies such as Roth conversions can be even more impactful between now and 2026. When you’re doing a Roth conversion, you’re converting a traditional IRA to a Roth IRA, and must pay the tax at the time of the conversion. That means that you would be paying the tax on the conversion at today’s lower rates and then all the growth within that Roth IRA will be tax-free.

If you elect to keep those funds in a traditional IRA and take them out after December 31, 2025, be aware that you’ll be taxed at higher rates than what we have today. This is just one example of why planning from a net perspective is paramount.

1. Cover Your Basics First

Anyone who tuned in for the Season 9 finale of The Guided Retirement Show with Dean and Chris Rett, CFP®, AIF® should already have a good idea of what we mean by covering the basics first. We’ve already touched on some of the basics, but in case you missed what Dean and Chris shared, let’s catch you up.

In that episode, Dean and Chris reviewed how the acronym BRITE effectively covers the basics of retirement planning.

  • Bookkeeping
  • Risk Management
  • Investments
  • Tax Planning
  • Estate Planning


That bookkeeping involves building a spending plan like we discussed earlier. We can’t stress enough how important that financial planning consideration is in order to have clarity and confidence to get to and through retirement.

Risk Management

Risk management is all about insurance. It ranges from health insurance, disability insurance, and long-term care insurance to life insurance and property casualty insurance. While talking about insurance isn’t exactly fun, it’s crucial to have so that you’re protected from potentially disastrous losses.


We’ve had several people meet with us for the first time that want to know right away what they should be investing in. Well, we can’t answer that without first knowing what your goals are and what your money needs to do for you. How much risk are you willing to take on with your investments? You need to make sure you’re properly assessing risk comfortability vs. risk capacity.

Tax Planning

Are you one of those people who has all their assets in tax-deferred accounts? It’s important to have your assets dispersed across all three tax buckets so you have good tax diversification. Those three buckets are your tax-deferred bucket, tax-free bucket, and taxable bucket. Again, make sure you understand what the rules for taking your money out of the accounts you own.

Estate Planning

We’ve talked a lot about financial planning considerations to get you to and through retirement, but it goes beyond that if you want to leave a legacy. Do you know how your assets will transfer to the next generation, and are your beneficiaries clear on that as well? It’s critical to have proper documentation in place so that your assets are dispersed as you wish after you’re gone.

Do You Have Questions About These Financial Planning Considerations?

We packed a lot of information into these financial planning considerations and have even more financial planning considerations that we could touch on. These five points are important starting points, though, and are vital to keep in mind throughout the financial planning process.

If you have any questions about what we’ve covered and how it could apply to you, start a conversation with us here.

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While these financial planning considerations are important for everyone, they’ll also be different for everyone. For example, we started talking about your goals. Well, your goals for retirement aren’t going to be the same as your friend or neighbor’s goals. That’s why you need to have a financial plan that’s designed around your unique needs, wants, and wishes. We’re ready to help you with that and further explain how these financial planning considerations relate to you.

Top 5 Financial Planning Considerations | Watch Guide

00:00 – Introduction
– 5. Start with the End in Mind
– 4. Be Conservative Applying an Inflation Rate to Your Plan
07:13 – 3. Work on a Firm and Realistic Budget
10:32 – 2. Always Plan from a Net Perspective
14:27 – 1. Cover Your Basics First
– What We Learned Today


Past Shows


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.