Making your retirement checklist (and checking it twice)

Q: My partner and I are both still working, but we want to make sure we’re taking the right steps today to be prepared for our retirement. Can you offer us a list of items we should be considering?

A: Planning for retirement is a lifelong process. And for partners, it can be even more challenging. Whether you are just starting to invest or you are well into your working years, this checklist can serve as a starting point to help prepare you for this important financial goal.

Tips for your working years …

One of the first and most important steps you can take is to estimate your retirement income needs. This involves identifying your potential retirement expenses, as well as the amount you might receive from various sources of retirement income (e.g., Social Security, pensions, personal investments, etc.).

For Social Security, you should be receiving a personal statement of estimated benefits each year. If you aren’t receiving these statements, visit the Social Security website at Of course, the exact amount of your Social Security benefits will depend on your earnings history. For information about your pensions, 401(k)s and other employer-sponsored retirement benefits, contact your company’s human-resources or benefits-administration department.

Calculating your estimated income from various sources will give you an idea of how much you may need to accumulate during your remaining working years to fill any income gaps. Do not be surprised if the numbers add up to a large sum — after all, this money may need to support you for 20-30 years. Fortunately, there are ways to make the most of your savings and investments.

Starting early and contributing as much as possible to employer-sponsored retirement plans and IRAs may help you to potentially accumulate more money. Why? Because investing in these tax-advantaged accounts means your money will work harder for you. The longer the money sits untouched, the more it can potentially compound.

Another vital step: Determine an appropriate asset allocation — how you divide your money among stocks, bonds and cash — for your portfolio. This should be based on your financial goals, tolerance for investment risk and time horizon. Be aware that your asset allocation will need to be adjusted periodically in response to major market moves or life changes.

… and for those approaching retirement

Once you are nearing retirement, you will want to craft a solid plan for distribution of your assets. Do you know one of the greatest risks that retirees face? According to the Society of Actuaries, it’s the possibility of outliving their money. That is why it’s essential to determine an appropriate annual withdrawal rate. This amount will be based on your overall assets, the estimated length of your retirement, an assumed annual rate of inflation and an estimate of how much your investments might earn each year.

Another consideration: After age 70-and-a-half, you will have to begin taking an annual withdrawal (also known as a required minimum distribution, or RMD) from some tax-deferred retirement accounts, including traditional IRAs. Preparing for this in advance may help reduce your tax burden — especially if your annual RMD may push you into a higher tax bracket.

Likewise, this is the time to make sure your final wishes are accurately documented and estate strategies are established to help minimize your heirs’ tax burden.

As you can see, planning for the different phases of retirement is a lifelong process. Following is a list that can help you along the way.

Retirement planning checklist

Find the category that best describes you, then answer the questions and bring the list to a qualified financial professional who can help make sure your retirement plan is on track.

Saving for retirement 1. Have you performed a comprehensive retirement-needs calculation? 2. Are you contributing enough to potentially reach your financial goal within your desired time frame by maximizing contributions to tax-advantaged retirement accounts, such as your employer-sponsored retirement plan and an IRA? 3. Is your asset allocation aligned with your retirement goal, risk tolerance and time horizon? 4. Have you determined if you might benefit from contributing to a traditional IRA or a Roth IRA? 5. Do you review your retirement portfolio each year and rebalance your asset allocation if necessary?

Nearing retirement 1. Do you know the payout options available to you (e.g., annuity or lump sum) with your employer-sponsored retirement account, and have you reviewed the pros and cons of each option? 2. Have you considered your health-insurance options (i.e., Medicare and various Medigap supplemental plans or employer-sponsored health insurance), out-of-pocket medical expenses and other related health-care costs? 3. Have you contacted Social Security to make sure your benefit statement and relevant personal information are accurate? 4. Should you purchase long-term care insurance? If so, have you investigated which benefits are desirable? 5. Is your asset allocation properly adjusted to reflect your need to begin drawing income from your portfolio soon? 6. Have you determined an appropriate withdrawal rate of your assets to help ensure that your retirement money might last 20 or more years? 7. Have you figured the amount of your RMD and developed a strategy to reduce your tax burden once you are required to begin taking RMDs? 8. Have you appointed a health-care proxy and durable power of attorney to take charge of your health and financial affairs if you are unable to do so? 9. Have you reviewed all your financial and legal documents to make sure beneficiaries are up-to-date? 10. Are you making effective use of estate-planning tools (such as trusts or a gifting strategy) that could reduce your taxable estate and help you pass along more assets to your heirs while also benefiting you now?

Jeremy Gussick is a financial advisor with LPL Financial, the nation’s leading independent broker-dealer.* Jeremy specializes in the financial planning needs of the LGBT community and was recently named a 2010 FIVE STAR Wealth Manager by Philadelphia Magazine.** He is active with several LGBT organizations in the Philadelphia region, including Delaware Valley Legacy Fund, Greater Philadelphia Professional Network and Independence Business Alliance. OutMoney appears monthly. If you have a question for Jeremy, e-mail him at [email protected].

This article was prepared with the assistance of McGraw-Hill Financial Communications and is not intended to provide specific investment advice or recommendations for any individual. Consult your financial advisor or Jeremy Gussick if you have any questions. LPL Financial, Member FINRA/SIPC. *Based on total revenues, as reported in Financial Planning Magazine, June 1996-2010. **Details on the award can be found at