Time to retire? When should I retire? Can I retire yet?
We asked 10 questions about retirement planning preparation to readers of our book Rolek Retirement Planning. The purpose of asking the questions was to help readers self-assess the effectiveness of their retirement planning preparation.
Readers were asked to rate their current preparation on a scale of 1 to 5, with 1 representing not prepared at all, and 5 representing very prepared. The results are displayed below.
Lifestyle Planning
The purpose of Lifestyle Planning is to consider how you will maintain a sense of purpose and connection after leaving full-time employment. Below are responses to our survey.
We asked survey respondents if they had considered how they'll maintain a sense of purpose and social connection during retirement. The most common response to the survey was a score of 3.
35% of survey respondents felt somewhat prepared regarding how they will maintain purpose and connection after leaving full-time employment. Only 8% felt totally unprepared.
Expense Planning
The purpose of Expense Planning is to estimate how much you'll need to spend each year during retirement. Below are responses to our survey.
We asked survey respondents if they had estimated what their retirement expenses will be on an annual basis. The most common response to the survey was a score of 3.
27% of survey respondents felt somewhat prepared with estimating their retirement expenses.
Income Planning
Income Planning involves creating a Retirement Cash Flow Statement to determine how much income you'll have from social security, pensions, and if you'll have a retirement income surplus or shortfall during retirement. Survey responses are below.
The first question asked to survey respondents was if they knew how much retirement income they'll receive from social security. The most common response to the survey was a score of 5.
31% of survey respondents felt very confident that they knew how much income social security will provide to them.
The second question asked was if respondents knew how much income they'll need investment accounts to produce each year to supplement their social security and pension income. The most common response to the survey was a score of 1.
23% of survey respondents did not feel prepared at all when it came to determining how much income they will need from their investment accounts during retirement.
Investment Planning
Retirement Investment Planning determines how much to allocate to FDIC-insured bank accounts vs. stocks vs bonds. It also establishes a plan for how you'll take income from your accounts. Survey responses are below.
We asked respondents if they had considered which account they'll use first and which account they'll use last during retirement. The most common response to the survey was a score of 1.
33% of survey respondents did not feel prepared at all when it came to determining which of their investment accounts would be used first to provide income during their retirement.
Tax Planning
Tax Planning includes how to minimize tax in the current year and long-term tax planning considerations as well. Survey responses are below.
First, we asked respondents if they had considered building Roth assets into their plan, which can provide tax-free growth. The most common response to the survey was a score of 1.
28% of survey respondents did not feel prepared at all regarding how to build Roth assets into their overall retirement plan.
Second, we asked respondents if they knew when they'd need to take their first Required Minimum Distribution from their pre-tax retirement accounts, most commonly their Traditional IRA. The most common response to the survey was a score of 5.
37% of survey respondents felt very prepared that they knew when they'd need to take their first Required Minimum Distribution during retirement.
Healthcare Planning
Healthcare Planning includes items such as enrolling in Medicare, selecting the correct Medicare Supplement Plan and Part D plan, and considering how to plan for long-term care and potential nursing home costs. Survey responses are below.
First, we asked respondents if they had considered how they'll fill the gaps in Medicare Part A & Part B. The most common response to the survey was a score of 1.
30% of survey respondents did not feel prepared at all about how they'll fill gaps in Medicare Part A & B.
Second, we asked respondents if they had considered how they'll address long-term care expenses. The most common response to the survey was a score of 1. 32% of survey respondents did not feel prepared at all about how they'll address future long-term care expenses.
Estate Planning
Estate Planning includes items such as making sure powers of attorney are set up, wills are up to date, trusts are created when appropriate, inheritance tax planning is considered, and methods to protect assets from nursing home costs are carefully evaluated with the help of an experienced estate attorney. Survey responses are below.
We asked respondents if they knew which of their assets would pass through the probate process as of today and if they'd considered ways to avoid probate. The most common response to the survey was a score of 1.
43% of survey respondents did not feel prepared at all regarding planning items related to the probate process.
Survey Summary:
The score of 1, or "very unprepared", was the most common response found in the retirement planning preparedness survey.
As a fiduciary financial advisor with retirement planning expertise, we can help you create a well-organized plan for retirement that address each of the items above, among many other important planning items.
Would you like a 1-on-1 retirement planning consultation? Fill out the “Request Consultation” form, call us at 267-427-5667, or email kyle.rolek@rolekretirement.com