The three biggest questions about retirement planning

A series of three short articles that will give you the answers you seek

By the time you reach your mid-fifties, a crude algorithm that calculates a savings target to reach or a spending limit to live within is not what you need. What you do need is a definitive answer to the question “Am I going to be OK?”, which obviously requires some appreciation of what you would like your OK to look like. In other words, what do you want to do, when do you want to do it and how big do you plan to do it? Once those questions have been answered you have the ability to start designing your retirement in an environment where you can confidently explore the life events you are contemplating.

You are not a cartographer trying to draft a ‘set it and forget it’ map

You are starting a 20-to-30-year journey through unknown terrain where frequent course adjustments will be required. What you need is a navigation system – not a quick and dirty mathematical algorithm that sets an annual spending limit.

There are three common questions that almost everyone who is planning their retirement will eventually consider:

  1. Am I going to be OK? Can I afford to enjoy the retirement I am looking forward to?
  2. How should I choose to fund my annual retirement cash flow needs?
  3. How will I identify proper course corrections when they become necessary?

These questions have earned the reputation of being cornerstone questions because those retirees that lack confidence in the answers tend to muddle together their retirement life choices and then, in turn, cobble together their choices of how best to source their annual cash flow requirements. No wonder most retirements are filled with unnecessary worry and doubt.

Everyone’s idea of “OK” looks different from the next. At Retirement Navigator, thirty years of practice as Retirement Income Specialists have taught us that people who get the most from their retirement from the financial resources they have accumulated have a) charted a course for their planned retirement journey, while also b) being aware that course corrections will be inevitable, when unanticipated detours
or opportunities present themselves.

Therefore, none of these retirement questions can be answered with the level of confidence you seek until you first define what your retirement “OK” looks like. How can you define that? By charting out your best guesses and assumptions of your retirement — what you want to do, when you want to do it and how big you’re planning to do it.

Defining your retirement will depend on your desired life outcomes and their associated costs and timelines. But, given that there will be a great number of year-by-year variances (peaks and valleys) in your annual retirement cash flow requirements – and there are so many choices of where your required cash flow can be sourced (with each cash flow source having different tax implications) – a wisely crafted funding strategy can significantly reduce the amount of money that goes to the tax man.

Ready to start answering your three big retirement questions?

Check out our series now:
Retirement planning: Big question #1

Am I going to be OK?

Retirement planning: Big question #2

Where do I choose to source my year-to-year cash flow requirements?

Retirement planning: Big question #3

How do I plan for course corrections in retirement?

Back to articlesDownload