The Top 10 Factors to Consider Before Retiring

I’ve recently been to two retirement planning seminars (one I’ve already posted about in My Experience at a Direct Mail Retirement Seminar and the second coming soon). After thinking about what the events offered and how financial advisors use these seminars to solicit new customers, I think I have a great idea for planners looking to court the soon-to-retire crowd.

That idea, turns out, is also valuable for anyone who’s looking to retire in the next 10 years or less.

Please indulge me a bit while I begin with some background thinking to set the scene. Then we’ll get to the heart of the post — which I think will be quite valuable for pre-retirees. Those of you who have already retired can add your wisdom by reviewing the list and see if I missed anything.

But first, let’s talk about general perspectives on retirement.

Note that these are my opinions and you may have different feelings. I have developed them using a couple different (and valuable) skills:

  • My background as a marketing executive. For almost 30 years I was paid to gather insights into what people thought/felt and make corresponding business decisions, so I have some skill at reading trends, perceptions, and patterns.
  • My background as a financial writer and coach. I started counseling people on basic financial issues in the early 90’s and began writing about money in the mid-90’s (as a freelance magazine writer). The latter then transitioned into blogging in 2005 and I’ve been writing about money ever since.

Those said, I’m not foolproof (of course) and my conclusions below could be good or off a bit. I’ll let you decide whether I’m correct or not.

Let’s get to it!

What Americans Believe About Retirement

I think there are a broad array of feelings about retirement, but I believe these are some of the most common American perspectives:

1. Retirement is viewed favorably.

I think the vast majority of Americans like retirement and the concept of it.

Just look at the numbers showing how many people like their jobs (spoiler: not many). So who wouldn’t want to be financially free of so-so jobs, terrible bosses, and the ball and chain forcing you to be at a certain location for the majority of your waking hours?

Even if you like your job, wouldn’t you like freedom better?

And since “retiring” is what so many Americans are working for financially, it’s not a big leap of faith to think they like the concept.

But while most view retirement favorably, there are some snags along the way…

2. Most have no idea how to prepare for retirement.

While Americans like the concept of retirement, most have no idea how to make it a reality.

The situation is similar to that of general money management — the concepts needed to retire are simple to understand, but can be difficult to implement.

Unfortunately, most Americans haven’t gotten past the first hurdle — they don’t even know the basic steps to retirement.

Even if they did there’s the whole issue of would they have the self-control to prepare for it. Americans generally aren’t big on financial self-control.

As a result many end up simply “winging it” when they retire.

I once heard someone say, “Hope is not a retirement strategy.” While that’s true, hope does appear to be a leading option for many retiring these days.

3. Americans are afraid of retirement.

Yep, afraid.

I think there are a few reasons for this:

  • They don’t know what they are doing. See point above.
  • It’s a huge financial decision. Remember the first time you bought a house? Did you have feelings like “What the heck am I doing?” and “Am I signing my life away and making a mistake?” I sure did. Retirement is just like that — but multiplied by a million. Since people are both lacking in knowledge AND making a gigantic financial decision, it’s easy to see how it could make things frightening.
  • They think they’ll run out of money. In the first retirement seminar we went to the planner said that the top fear among potential retirees was that they’d run out of money. As such, his job was to work with them to make sure they didn’t and had a plan that made them comfortable. It’s a valid concern given how much the average American has in savings these days. More on that below.
  • It’s unknown. Even for those who are prepared to retire and have their finances in order, retirement is a big unknown and people tend to fear what they don’t understand. Most have spent 30 to 45 years doing one thing (working) and that’s all they’ve known for their entire adult lives. Now that’s going to change into something they aren’t familiar with. This is why my retirement interviews are so popular — they give a glimpse of what it’s like planning for and experiencing retirement. They demystify the unknown of retirement.

By the way, I’m always looking for more retirement interviewees, so if you’d like to volunteer, please contact me.

4. Most are inadequately prepared for retirement.

Look at the average American’s finances and you can see they are nowhere near where they need to be to retire.

They aren’t even close to having saved enough and for most time is running out. That’s why “work longer” is another popular retirement “strategy”. There’s no choice — they MUST work longer.

The Opportunity

Now wrap all those conclusions together and you get…

Retirement is something people like but have no idea how to achieve, are afraid of it, and are completely unprepared.

As a result you have (as a planner) a great opportunity to be a tremendous help in solving a major problem for millions of Americans. You can help them overcome their issues and achieve a dream. Think you can make money at that? I bet you can!

What if a financial planner looking for new clients offered a free seminar that addressed these concerns? It could briefly cover the most vital retirement issues, get people nodding yes and liking what you were saying, then you could follow up with free (people love FREE) consultations to discuss their specific finances in person.

Sounds like a winner, right? It does to me!

I would call it something like “The Top 10 Factors to Consider Before Retiring: The Key Issues Everyone Needs to Address for a Successful Retirement”.

This is something I’d like to attend myself!

The only problem — what issues would be covered?

I’m so glad you asked…

Top 10 Retirement Issues

I’ll take a stab at the top ten retirement issues, then you can chime in with your thoughts — giving me feedback on what I may have missed and/or gotten wrong. From there we’ll develop the ultimate pre-retirement checklist admired by millions worldwide. Hahaha!

Anyway, here’s my list — written in question form (I think it’s more compelling this way though making each of these simple statements would work as well):

1. What are you going to do in retirement?

THE major question IMO.

How will you spend your time, who will you spend it with, what activities will you do and which will you eliminate, and on and on.

We addressed these issues in How to Prepare in Advance for a Great Retirement. I also bought What Color Is Your Parachute for Retirement since I heard it was a great “what do you do in retirement?” book. If it’s good, I’ll be doing a write up about it.

This is an in-depth topic, of course, but a planner could offer some suggestions and/or distribute a handout for attendees to review/consider later.

2. What are your retirement spending needs?

Step one of preparing financially for retirement is determining what you plan to/can spend.

Obviously, the more data you have here, the more accurate your estimate will be.

This is why I’d recommend creating a budget and tracking spending for a few years before retirement. Then you’ll have a solid handle on what you’ll spend and can know with relative certainty what your requirements are.

Otherwise you will have no idea. And retiring without any idea of what you’ll spend is a recipe for disaster.

3. How do you plan to fund retirement?

The other side of the retirement financial equation — how will you afford it?

As I note in my retirement email series — there are three methods of funding retirement:

  • Income — Setting up assets and/or working in some capacity to produce income.
  • Asset withdrawal — Liquidating assets to cover spending.
  • Combination of the two — Part income, part asset drawdown.

We are using the income strategy for now since we make more than what we spend. But my guess is that most people use the combination method — even if it’s simply Social Security for income and asset withdrawal from the small savings they have.

This is (obviously) an important topic and I think people would LOVE to hear a planner’s thoughts on it.

4. How can you maximize Social Security?

The first three questions were more big picture in nature. We’re getting into the details from here on out.

Social Security is like most other government programs — massive, complex, and fraught with the potential of making a bad move. As such, most retirees will want to know how to handle Social Security to get the most out of it.

Should they take it early, on time, or late? What about spousal implications and strategies? What about this? What about that? Tons of questions and options exist. It’s another unknown as well as a huge financial decision, a second opportunity ripe for someone to come in, answer the questions, and be a financial hero.

By the way, after I wrote Why Taking Social Security Early Might Be the Best Option a reader sent me this post. The highlights:

The problem with traditional breakeven analysis is that it doesn’t reflect the time value of money. That might not matter so much for the many retirees who need to spend their Social Security as soon as they get it. For those who can invest their benefit checks, however, the time value of money makes a huge difference, because investing early benefit checks provides a longer time horizon for investment growth.

We are still in the process of deciding what to do, but the above illustrates that there are a lot of moving pieces and people can be overwhelmed — making this a perfect issue to address.

5. What’s the optimal strategy for withdrawing assets from various accounts?

I was going to call this “Developing an Optimal Decumulation Strategy” or something similar, but I thought that would be like speaking French to most Americans. So I dumbed-down the financial jargon.

I’m not sure how many people have a host of savings vehicles like IRAs, Roth IRAs, etc., but 1) this is an important topic for those who do and 2) even those who don’t have multiple options will be impressed that someone even knows about/is addressing this, so it makes my top 10 list.

6. How can you minimize taxes to keep most of your assets?

One of the top expenses for retirees are taxes — or could be — especially for those sitting on large IRA/401k balances.

A big part of this is how to deal with required minimum distributions to reduce taxes. Do you take distributions early or late? There’s a lot of debate on this both ways. And most people have no clue what to consider in making the best decision. Thus they would likely appreciate some guidance.

7. What’s your plan for healthcare?

Not as much of an issue for those who qualify for Medicare (though there still are issues) but for early retirees this is a MAJOR issue.

As I say often, if millionaires are concerned about affording healthcare in retirement (see item #12 in 13 Surprising Facts from 100 Millionaire Interviews and What We Can Learn from Them), we all should be.

For now we are using a healthshare and so far it’s been a good option. But this is a political hot potato issue, so I expect changes. Then again, if our government (Congress) remains divided, change is unlikely no matter who’s elected president.

8. What do you plan to do about housing in retirement?

Taxes, housing, and healthcare are among the top expense categories in retirement. That’s why they are all on this list.

Some of the housing-related retirement questions that need to be addressed:

  • Where will you live (what city)?
  • Will you stay in your current home?
  • If so, do you need/want to remodel?
  • What about your mortgage — will you still have it in retirement?
  • Should you consider downsizing?

I could go on but these are the major ones IMO.

9. Is your insurance plan ready for retirement?

The list of possible insurances is long. Will you need them in retirement?

In particular, people probably at least want a perspective on long-term care insurance — who needs it and who doesn’t.

But there’s a whole host of other insurances that need to be considered and discussed as well.

10. How do you plan to distribute your estate after you pass?

Do you have an estate plan? How about the proper documents to distribute your assets? What about the right papers for your care if you become incapacitated?

There are a host of estate planning questions that people likely want addressed.

Retirement Honorable Mentions

Here are a few issues that I left out but either could be covered under one of the items above or replace them:

1. How should you deal with major, one-time expenses in retirement?

Some big-ticket costs that people might have to face in retirement:

  • College for kids
  • Wedding(s) for kids
  • Helping kids get established post-college
  • Caring for aging parents
  • The costs of caring for themselves in old age

Just to name a few…

2. How should you mange debt in retirement?

I mentioned mortgages above and hopefully that’s the only debt (if any).

But just in case it isn’t, it’s worth discussing.

3. What giving do you plan to do in retirement?

Maybe zero, maybe a ton, maybe volunteering, maybe something else.

4. How should your investments change in preparation for and into retirement?

This could be part of #3 above but could also be important/compelling enough to make the list on its own.

It’s a big, important question that is critical to get right, especially for the majority of Americans who have limited retirement savings.

So that’s the sort of thing that runs through my mind when I attend a retirement seminar and see opportunities for a better presentation.

What do you think of my list?


Originally posted at

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