Retirement Income Planning 10-Step Checklist

Retirement Income Planning 10-Step Checklist

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It’s never too early to start planning for retirement. Even if you’re 30 years old, you need to start thinking about the fact that one day — whether it’s when you’re 60, 65, or 70 — you will be unemployed for potentially 30 to 40 years.

How do you plan for something that may not begin for many years and may last for several decades? A written evolving plan that’s customized to your needs and is continually monitored and updated is key. Here’s a 10-step checklist to help you get started:

1. Establish a flexible retirement target age.

Most people retire before they plan to do so. Be mentally and financially prepared to retire three years before or after your target age.

2. Calculate projected annual planned and unplanned retirement expenses adjusted for inflation.

Planned expenses include recurring and nonrecurring items such as auto and appliance replacements and home improvements. Healthcare and extended care expenses are very important and need to be adjusted using a higher inflation rate than other types of expenses.

3. Identify projected annual sources and amounts of sustainable income.

This includes Social Security, public and private pensions, and existing fixed income annuities.

4. Calculate projected annual retirement income shortfalls.

Subtract the results of step #3 from step #2.

5. Design a plan for reducing or eliminating projected annual retirement income shortfalls.

This is no small undertaking. Numerous things need to be considered, including, but not limited to, timing and amounts of projected shortfalls, current investment plans, current insurance protection, projected annual savings, projected rates of return, and projected income tax liabilities.

6. Include periodic conversion of a portion of your investment portfolio to multiple deferred income streams beginning at various dates in retirement in your plan.

This should generally include various types of fixed income annuities offered by highly-rated life insurance companies that will generate specified amounts of sustainable term or lifetime income as needed. Purchases should occur during bull markets whenever possible in order to minimize investment amounts and protect investment assets from inevitable stock market downturns.

7. Protect your retirement income plan.

This includes insurance solutions such as long-term care and life insurance as well as having appropriate estate planning documents in place. The sooner you apply for long-term care and life insurance, the cheaper it will be and the more likely you will be insurable.

8. Create a plan to pay off your mortgage by retirement without paying additional principal.

You should ideally be free of major debt obligations when you retire or early in your retirement. Consider refinancing 30-year mortgages to 15 years whenever possible. As a general rule, you shouldn’t use excess cash to pay down principal assuming that the after-tax return achievable from investment of the cash is projected to exceed the after-tax savings from your mortgage interest deduction.

9. Invest windfalls for retirement.

It’s tempting to splurge when you receive nonrecurring windfalls such as unexpected bonuses, stock options, or inheritances. It’s important, however, to remain focused on solutions for reducing or eliminating projected retirement income shortfalls.

10. Practice retirement.

Retirement isn’t all about finances. Prepare yourself mentally and physically for the transition to retirement beginning ten years before your targeted retirement age. Visualize your daily routine. A healthy lifestyle that begins long before you retire is a key element of an enjoyable and fulfilling retirement.


Preparing for retirement is a monumental task. There are a lot of moving parts and many unknown variables. As previously stated, it’s never too early to start planning for retirement.

One final, if not the most important, piece of advice:  don’t try to do it yourself. Be a willing and committed participant in the process, however, surround yourself with a team of knowledgeable and experienced professionals who specialize in retirement income planning, care about you and your family and what’s important to you, and will work with you to minimize the bumps in the road.

23 Corporate Plaza Drive, Suite 150
Newport Beach, CA 92660-7908

Phone: (949) 251-0910 or Toll Free: Plan2Retire (844-752-6273)


Advisory services offered through Retirement Income Center, a Registered Investment Advisor

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