Posted by Gary Abely, CPA, CFP®, AIF®
Most of us know that financial plans involve saving and investing, budgeting, risk management, debt management, tax planning, retirement planning and estate planning. All of these components do involve money in one form or another, yet the best financial plans should involve discussions of non-monetary items as well. For clients close to retirement, I have developed a list of both monetary and non-monetary questions to ponder:
Monetary Considerations
- Do you have a monthly budget for expenses? Is the budget monitored, updated and do you take corrective actions when expenses fall outside budget?
- If you have debt, do you have a strategy in place to pay off higher interest debt first? Have you considered consolidating your debt to save on interest expense?
- Do you have a monthly savings goal? What are the components of your savings goal? (New home purchase, expected medical costs for family addition, education costs for children, retirement, new car, vacation, holiday gifts, etc.)
- Do you have an emergency fund for life’s unexpected occurrences? (Disability, job loss, medical bills, etc.)
- Do you utilize credit cards for unexpected costs or to borrow money?
- Is your mortgage debt or monthly rent expense appropriate based upon your income?
- Have you inquired recently whether you could save money by refinancing your mortgage or other debt obligations?
- Is it smarter for you to purchase or lease a car based upon your driving needs and past experience?
- Are your home, car, life and personal assets adequately insured to replace assets or lost income?
- Do you have disability insurance at work and do you understand the coverage and its limitations?
- Do you have a plan in place to replace income if you are disabled for an extended period of time (long-term disability insurance)?
- What is your long-term health care plan (family help, insurance, self-insure, Medicaid, VA)?
- Are you saving at least 10% of your income toward your various savings goals?
- Have you calculated how much you will need in assets to retire at various ages? (62, 65, 70)
- If you will be subject to estate taxes, have you met with a qualified estate tax attorney to implement a strategy to mitigate the impact on your taxable estate?
Non-Monetary Considerations
- How do you feel when your investments decline in value by 10%, 20%, 30%+?
- How long did your parents live and were they able to achieve their retirement goals?
- Describe your “perfect retirement”. Is it living on the beach, going back to school, helping out with your grandchildren, beginning a new career, developing new friendships, being a mentor to someone?
- Do you plan on remaining in your current home? Have you evaluated the long-term pros and cons of your residence and how it will impact your “perfect retirement”? Is your residence multi-storied?
- Do you understand how Medicare works and your options including Medicare Supplements, Part C Medicare, and do you understand the costs for Part B and Part D Medicare? Does your budget include at least $1,000 per month month for healthcare needs (for a couple) or do you have special needs requiring additional resources due to high-cost medications or expected long-term care needs?
- Does your current medical condition create doubt in your mind that you can achieve your “perfect retirement”?
- Do you have a support group of friends and family that can help you with personal decisions?
- Have you considered how long you may live and what you prefer for end-of-life care?
- Do you have basic legal documents in place and updated based upon your current desires? Do family members know where to find your legal documents or do they have copies?
- Do you wish to leave an inheritance to your children, other family members or friends, and/or to charity?
- Have you determined how much of your estate you wish to leave to family, friends and charity and in what proportions?
- Have you and/or your spouse agreed on the level of support you may provide family members in need during your retirement? (Example: parents in need of long-term care, help with children’s student debt, assisting grandchildren with college or private school, etc.)
- Have you developed specific plans on how you will spend your “routine” retirement day? Studies support that those who work longer, volunteer their time or are otherwise engaged during their retirement years tend to live longer, on average.
- Have you and your spouse discussed whether you will both retire simultaneously and how much time will be spent together during the now, non-work day?
- What lifestyle changes can you employ now to help ensure you can pursue your “perfect retirement”?
While the above list of questions are certainly not meant to be exhaustive, they may help you as you contemplate the retirement years. I host two workshops at our offices, 1111 Douglas Avenue, Altamonte Springs, to help you answer some of these questions. To registered for the workshops, just click on their titles: “Countdown to Retirement” and “When can you retire? Know your number.” Our workshops are free and for educational purposes only, leave your checkbook at home! You are encouraged to come with your questions.
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