Plan For Your Retirement With This Ultimate Checklist

A regret-free retirement requires several years of planning, putting money aside, and staying the course.

The average expected retirement age in America is now 66, according to a Gallup poll. In comparison, life expectancy is 76.4 years. This is only about ten years of enjoying life after work.

Retirement is a crucial phase you prepare for by working hard for decades to ensure you can save enough to enjoy your golden years. The retirement checklist below highlights steps you need to take to guarantee a comfortable retirement.

When Should You Start Planning For Retirement?

When it comes to retirement, it is always better to start saving early. Start preparing your retirement plan in your 20s and 30s or when you start collecting paychecks.

An early start allows room to make mistakes and recover from them, and your savings can grow significantly through the power of compounding.

If you missed out on putting money aside in your early working years, there’s still hope, but you will have to double up your efforts.

Preparing For Retirement Checklist

1. Know How Much Money You Need


In general, preparing for retirement means saving 10% to 15% of your income before taxes. The aim is to have a retirement pot that can provide 70% of your pre-retirement salary annually.

To make tracking your progress easier, you can target a particular amount to save based on your age. Below are the recommended earnings you need to set aside by age to help ensure a comfortable retirement, according to Fidelity.

  • Age 30 – Save a year’s worth of your salary
  • Age 40 – Thrice your annual salary
  • Age 50 – Six times your salary
  • Age 60 – Eight times your salary
  • Age 67 – Ten times your annual salary

Additionally, retirees get a monthly Social Security retirement benefit, the amount of which depends on the age a person retired.

Social Security retirement benefits typically replace 40% of your pre-retirement earnings.

Seniors who retire at full retirement age in 2023 will get the maximum monthly benefit of $3,627. Those who retire at 62 will receive the maximum amount of $2,572.

2. Start Budgeting

Stick to a budget to ensure that you can set money aside. Spend only what you need. Doing this allows for easy management of your finances and better awareness of where your money goes each month.

Tracking and categorizing expenditures into fixed (rent, utilities, monthly payments, etc.) and variable expenses (such as shopping, gas, and dining out) are also vital.

Check your variable costs. This area often allows you to find expenses you can cut back.

Another way to budget is using the 50/30/20 rule, which involves dividing your net income into three:

  • 50% for Needs – Mandatory expenses that include rent or mortgage, bills, and groceries
  • 30% for Wants – Includes shopping, entertainment and travelling
  • 20% for Savings – Includes savings, retirement, and debt repayments (credit cards, loans, etc.)

3. Pay Off Your Debt

Your debts should “retire” before you do to ensure your retirement savings are enough to sustain your preferred standard of living once you retire.

Paying off debts today lets you enjoy more flexibility later. List your debt obligations and their interest rates. Try paying more than the monthly minimum, and prioritize those with higher interest rates.

While you are paying your debts, avoid taking on more debt. After repaying debt, consider putting the same amount allotted for debt repayment toward your savings.

A debt consolidation loan can help lower your interest charges, so you pay less interest overall and can become debt-free faster. And, a debt management program can help lower your credit card payments by 30% to 50%.

4. Contribute To Your Retirement Savings Plans

If you have access to retirement savings plans, consider making the maximum contributions. Maxing out your contributions is one way to achieve financial dependence during your later years.

For your 401(k) retirement plan, aim to contribute enough money to get the full employer match.

Consider opening an Individual Retirement Account (IRA) as well. The maximum annual limit for 2023 is $6,500, or $7,500 if you are over 50.

Likewise, make maximum contributions to your health savings account (HSA). HSA contribution limits in 2023 for self-only coverage is $3,850 and $7,750 for family coverage.

If you are an eligible 55-year-old, you can contribute an additional $1,000 as a catch-up contribution.

5. Choose The Right Investments

Pick out appropriate retirement investment options that can provide future growth and generate a stable retirement income stream.

Invest in a diversified portfolio that can weather market ups and downs, and it should match your risk tolerance. A diversified portfolio can include a mix of stocks, fixed-income assets, real estate investment trusts (REITs), and more.

By investing in stocks, you can expect high returns over the long term. Bonds will have lower long-term returns but have more stability.

You can choose to manage your investments using a self-directed brokerage account, or leave the management to professionals by using a Robo-Advisor.

Regardless of which route you take, ensure you are investing for the long-term and shun the urge to take unnecessary risks that doom your retirement plans.

6. Create an Emergency Fund

An emergency fund is a cash reserve set aside for financial emergencies or unexpected expenses.

Open a separate account for your emergency fund and automate your contributions to it. It is best to place emergency funds in a high-yield savings account you can access easily without monthly fees.

In general, 3-6 months worth of expenses should be set aside to pay for unexpected expenses, so you can avoid taking on unnecessary debt.

7. Review Your Insurance

Before retiring, tidy up your insurance and determine where to get health insurance coverage.

Social security will not be adequate to cover medical expenses and Medicare coverage is only about two-thirds of medical costs.

During retirement, healthcare is often among the highest expenses you will incur, and many retirees end up shelling out hundreds of thousands on medical bills.

A 65-year-old healthy couple who retired in 2022 is expected to spend around $315,000 for out-of-pocket expenses during retirement.

Fortunately, having other insurance plans like Blue Cross Blue Shield plans, Medicaid for low-income seniors, and Medicare Supplement plans can be helpful for retirees.

8. Review Your Estate Plan

Be prepared with an estate plan to avoid issues after your passing and ensure your assets are distributed according to your wishes.

Create a will, establish guardians for living dependents, appoint someone as your healthcare proxy if you become debilitated, and assign a power of attorney.

Designate beneficiaries on retirement accounts, life insurance plans, and shared assets. Make sure to notarize all documents and keep them in a safe place, including your personal data.

You should review your estate plan every few years and update it each time you have a life-changing event.

9. Consider Activities and Interests Post-Retirement

The financial aspect of your retirement is not the only thing you need to prepare for. Devote time as well to decide what your activities and interests will be after you retire.

Most people dream of the day they retire and start living for themselves. But a study showed that 6% to 9% of retirees will experience a deterioration in mental health within six years following retirement.

So, it is advisable to have a list of things you want to do post-retirement. Consider educational and rewarding activities that expand your mind and improve your health and well-being.

The most common things to do post-retirement include moving somewhere new, travelling, and taking up new hobbies or sports.

Are You Ready For Retirement?

When it comes to retiring in comfort, timing is everything. But how do you know if you are ready for retirement?

The first sign obviously is when you have hit the full retirement age of 66. You can retire at 62, but the retirement benefits you receive will be much lower.

You may also be ready for retirement after you have paid all your debts. The moment you are debt-free, your financial risk is lesser, and it is easier to plan your income needs.

Another indication you are ready to retire is if your investment portfolio has hit the magic number needed to fund your retirement lifestyle. To be sure, sit down with a financial advisor. Carefully re-evaluate your portfolio to determine if adjustments are necessary.

Plan for your retirement with this ultimate checklist to help ensure a smooth transition into one of the most critical phases of life.