The Most Important Retirement Planning Questions You Need to Ask

Written by , March 13, 2014

The Most Important Retirement Planning Questions You Need to AskEffective retirement planning is much more than just plugging a few numbers into an online calculator in order to come up with an amount that you need to save each month. Unfortunately, it’s easy to fall into a mindset of thinking that coming up with a long-term retirement plan is just that simple.

The retirement planning process is actually highly individualized, and the best way to come up with a plan for reaching your goals is to avoid taking a “cookie cutter” approach.

Instead, you can start by asking yourself the following most important retirement planning questions, then using your answers to craft an individual plan to move forward.

  • When Do You Want to Retire? This is one of the most important questions you can ask yourself. The longer your investment timeframe (that is, the more years you have between now and the age at which you want to retire), the more options you have on how to reach your savings goal.
    • If, after asking this question and making your savings projections you determine that you may not be able to meet that target retirement date, you can then consider pushing that date forward, perhaps continuing to work part time during retirement, or making other adjustments to your current financial practices.
  • What Type of Lifestyle Do You Want During Retirement? The easiest approach to coming up with a target amount to have saved by retirement is to choose a flat sum and work backwards from there. But the tendency to oversimplify the process will inevitably come into play, as many people just choose a nice round number that may or may not be based on a thoughtful analysis. It’s surprising how many people – who may be in vastly different financial situations – have decided that $1 million (or $500,000, or $3 million) is an appropriate retirement savings goal.
    • Instead, start the process by asking yourself what type of lifestyle you want to have during retirement. If you envision your retirement filled with luxury travel, then your target savings number will be much different than someone who wants to retire to a modest cabin so they can spend their days hunting and fishing. By identifying your desired retirement lifestyle you can then thoughtfully attach real-world numbers to those lifestyle goals, and be able to calculate an overall number that makes the most sense for you.
  • What Do You Want to Leave Behind? As you plan for retirement, you may also want to consider what you want to have after retirement – that is, what you want to leave behind to your children and heirs. Depending on your particular estate planning goals, asking yourself this question may also help you decide how you want to structure your retirement planning. For example, there are significant differences in the estate planning implications of Roth IRAs as compared to traditional IRAs.
  • Finally, don’t limit yourself just to the questions and issues described here. It’s quite likely that once you begin thinking about your individual financial situation and retirement plans, you’ll have more questions to ask yourself.

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    One Response to “The Most Important Retirement Planning Questions You Need to Ask”

    1. […] Many new retirees are surprised to learn just how much their employers were subsidizing the cost of their health insurance. The true market rates are generally much higher than what many people pay when they’re working, and it’s important to include these estimated costs in your overall retirement plan. […]

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