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Retirement Road Map

Retirement Downloads


Personal Balance Sheet pdf.

Personal Monthly Budget Sheet pdf. 


To many, the thought of retirement creates a lot of questions. Am I on the right track? What else should I be doing? What steps do I need to take before I officially retire? This article and the corresponding road map are designed to help answer these questions and more. Since everyone's situation and needs are different, there is no way to create a road map specific to all who read this. As a result, you may find that some of the information is not relevant to you. In that case, we won’t be offended if you skip over a section or two. On the other hand, you may find that even after a thorough read you have additional questions or concerns. We want to be a resource for you. Feel free to call or email us with your specific questions. We are an open book. Enjoy!

5 Years Prior to Retirement

Establish Retirement Goals and Objectives:

The first, and one of the most important, step on your path to a successful retirement is to define what you want retirement to be. This may seem obvious or a little cliche but we have found that the average person only has a fuzzy idea of what their retirement will look like. Start by making a prioritized list of what is most important to you and don’t worry too much about how realistic your goals are (at least during this step). If retiring prior to 62 is what is most important to you, write it down and put it at the top of your list. If you want to travel and don’t care if you have to work an extra year or two in order to afford the travel, put that at the top of your list. If travel is important, write down how often and where you want to travel. You will also want to start thinking about your living arrangements in retirement. Are you planning to downsize? Will you want a vacation or winter home? Will you move closer to the kids or grandkids?

Assessment of Current Resources:

The next step is to assess what your current financial situation looks like. First and foremost, you will want to create your own personal balance sheet. An excel spreadsheet is a great tool for this. Start by taking an inventory of your assets. Think about everything you own; vehicles, real estate, IRAs, bank accounts, 401ks, collectables, life insurance cash value, etc. and write it out on a personal balance sheet. Then, below your assets list your liabilities. Be sure to include credit card balances, mortgages, car loans, student loans, home equity loans, etc. It is a good idea to include loan payment amounts and interest rates as well. To assist you in creating a personal balance sheet, we have included a blank balance sheet at the end of this article for your use. If you would like this in excel format email us at contact@fsgmichigan.com.

In addition to your assets and liabilities, you will want to get retirement income estimates; specifically Social Security and pension projections. You can get estimates of your Social Security benefits by going to their website (www.ssa.gov), click on retirement estimator and enter your information. For those who have pensions, you will need to work with your Human Resources department to get those estimates. This information will give you and your financial advisor a really good idea of what your current financial situation looks like. Understanding where you are financially in the present is the first step in determining what needs to be done to get you where you want to go…Retirement!

Develop a Plan:

So far, you have determined where you are financially (assessment of current resources) and where you want to be (established goals and objectives). Now, it is time to develop a plan that will take you from where you are to where you want to be. Most will find this step more difficult than any others in the retirement road map. To develop an effective strategy and to be confident in that strategy, you need a solid understanding of retirement plan types, tax laws, budgeting, inflation and more. In our opinion, it is difficult to develop a solid retirement plan without the use of good financial/retirement planning software. If you have a fairly simple situation, enjoy this kind of stuff, and have a good knowledge base, you can find DIY retirement software with a simple Google search. A word of warning though; these DIY softwares tend to be oversimplified and, like most tools, if not used properly will be inaccurate. We use eMoney financial planning software. It is some of the best planning software on the market but is expensive and takes a lot of practice to master. The fact is that retirement planning is complicated and most will have the best odds of a successful retirement by choosing to work with an Independent Financial Advisor. When looking for an advisor, we suggest you narrow your search to someone who has earned the CFP(R) or ChFC(R) designations. You may also want to ask them what financial planning software they use.

2-5 Years Prior to Retirement

Consider Reducing Your Portfolio Risk:

Market risk is most damaging to your retirement in the years just prior to and just after your retirement date. This is because you are transitioning from the accumulation phase of your investing life to the distribution phase. During your working years, you should be regularly contributing to your 401k, IRA’s, etc. so if the market goes down you are continuously buying on the way down. Essentially, you are getting a discount on the stocks you are buying as stocks decrease in price. When the market recovers you are better off than you were before. Once you start taking money from your investments to live on in retirement, the opposite is true. If you are taking regular distributions as the market goes down, you are selling low (realizing losses). About 5 years from retirement is a good time to take a hard look at how aggressive you are and determine if you should reduce risk. For example, you may want to consider reducing the amount of stocks you own and increase your allocation to bonds, CDs or cash.

Finalize Major Expenses:

This step is very situational. If you plan on staying in your current home in retirement, it makes sense to evaluate what major repairs or maintenance may need to be done in the not-too-distant future. If the furnace, roof, siding, kitchen or bathroom need to be replaced or remodeled, you may want to consider doing this before you retire. Consider your vehicle situation as well. If your vehicle is getting old, it may make sense to purchase a new or newer car during your working years. This can reduce “unexpected expenses” while you are living on a fixed income in retirement.

Establish a Budget and Reduce Debt:

This is a great step to take at any point in life. If you are 5, 10, 20 or even 30 years from retirement, it is a great idea to have a working budget. As you approach retirement, it becomes vitally important. In order to understand how much income you will need in retirement, you need to identify how much you are currently spending and on what you are spending it. Once you understand these two things, it is pretty easy to go line by line through your budget and determine what expenses will be reduced or eliminated in retirement and which will increase. When it comes down to it, having a successful retirement is about managing income and expenses. Paying off debt is one of the areas that can really free up cash flow. It is often a good idea to try and pay off as much debt as you can before retirement. In addition to tracking your expenses, it is a good idea to write down how much you are saving each year and where. At the end of this article, you will find a blank sample budget. We highly recommend filling this in at least once a year.

Review Retirement Projections:

With any plan or goal, it is smart to track your progress periodically. Essentially, this is a repeat of the first three steps on the retirement roadmap. Your priorities may have changed so you will want to confirm that you have the same goals. Hopefully, your assets have grown and your liabilities have decreased so taking an updated inventory of where you are is a good idea. Use this updated information to confirm that you are on track to reach your goals and if not, make adjustments to your plan.

1-2 Years Prior to Retirement

Get updated Guaranteed Income Projection

At this point, you will want to get updated projections for your pension, Social Security and annuities. These projected income amounts can change over time and it is good to get updated numbers as you approach retirement.

Review Insurance Needs:

Depending on your age, needs, and what benefits your employer provides in retirement, you will want to spend some time exploring your options for health, life, and long term care insurance. If you plan to retire at 65 or older and are eligible for Medicare, you will need to research supplemental policies. If you are under 65, there are several options you will want to consider. These options include COBRA, the health insurance marketplace, and private health insurance outside of the marketplace. Additionally, this is a good time to review your home, auto and liability insurance. You will want to confirm adequate coverage and may want to shop around to see if you can reduce your premiums.

Consider Downsizing:

This consideration is very situational. Some love their home and have no desire to change their living arrangements. From my experience, though, a significant portion of those approaching retirement need to or should consider changing their living arrangement. The most common reason for this would be a reduced need in the size of the house in which you live. Kids grow up and move out (hopefully) and you may not need as big of a home. Downsizing can help to reduce mortgage payments, taxes, insurance and maintenance. Consider being intentional about how you downsize. Focus on living arrangements that will work for you as you age. A condo or retirement living community can be a good option to help reduce the amount of upkeep you need to do personally. A single story home may also make more sense than a two-story or tri-level as you age.

If you plan on purchasing or renting a second home in retirement, it is a good idea to think about and plan for this now. A word of caution though; it is wise to “try out” a few areas to see what you like best before you buy. We have had several of our Michigan clients buy a winter home down South and decide, not long after, they prefer it elsewhere.

Within 1 Year of Retirement

Meet with HR:

In most cases, it will make sense to let your employer know your plans for retirement. It is beneficial to meet with HR to discuss your benefits as you transition into retirement.

Apply for Social Security, Medicare, and Medicare Supplements:

Two to three months prior to 65, you will want to apply for Medicare benefits. Additionally, if you don’t have employer-provided retirement healthcare, you will want to research and apply for Medicare supplement policies. As for Social Security, you need to apply three months prior to when you would like to start receiving your first payment. This may or may not coincide with your retirement date as you have the option to take Social Security anytime between 62 and 70 years old. There are many factors to consider while determining when and how to take Social Security. It is a good idea to do a lot of research on how Social Security works and/or meet with a Financial Planner who is competent in Social Security planning. You can check out our website for more info on claiming Social Security. https://fsgmichigan.com/blog/social-security-what-you-need-to-know-before-you-claim 

Turn in Pension Paperwork:

If applicable, you will need to apply for your pension and retirement healthcare benefits a few months before retirement. Work with your HR department to determine a timeline for what needs to be done and when.

Consider Rollover options:

Once you separate service from your employer, you have the option to rollover your 401k, 403b, 457, etc. to an IRA. As with any transaction, there are benefits and disadvantages to this but we believe rolling to an IRA makes sense for most. IRAs typically have more investment options than an employer-sponsored plan (ie: 401k), distribution options can be more flexible, and fees can be lower when an IRA if structured properly. In our opinion (we may be biased), the biggest benefit to rolling to an IRA is access to the Financial Advisor, investment manager, or company of your choice. You are not limited to who your employer chose.


We hope this article and Road map are helpful to you! If you have any questions, please reach out to us. You may also find our Resources section helpful for additional educational materials. https://fsgmichigan.com/blog 



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