3 steps to build a successful retirement plan

Retirement looks different for everyone. But we all want to retire on our own schedule and have the freedom to choose what is important to us. Planning should start with defining the lifestyle you want to have and taking a serious look at your expenses and income sources. Some simple repositioning of assets can make a big difference for a confident retirement.

To create your personal plan for retirement, follow these three steps.

Step 1: Identify your expenses and income

Begin by thinking about what an ideal retirement looks like for you. What are the non-negotiables in your retirement lifestyle? Will you downsize your home? Take a family trip each year? What is important enough to you that you want to protect that expense in retirement?

Categorize your expenses in two ways:

• Essential expenses are your needs. These may include food, shelter, insurance premiums and medication.
• Lifestyle expenses are things you want, but don’t require to survive. Traveling, charitable donations, dining out and entertainment are examples of lifestyle expenses.

Take a careful look at your lifestyle expenses. Although these are your wants, not needs, some of them may be important enough that you consider them essential expenses. Traveling to keep close with family, or leaving a legacy for your children and grandchildren, may rise to this level.

Next, identify expected income sources. You may expect to have income in retirement from Social Security, pensions or annuities. Gather what you expect to receive as guaranteed retirement income and visit www.ssa.gov to estimate your potential social security benefits.

Step 2: Analyze expenses versus income

Once you’ve identified expenses and income sources, it’s time to do some analysis.

Our retirement income planning worksheet provides a way to compare your expenses with your expected sources of income. It can help identify where gaps exist between what you spend money on in retirement and the income you expect to receive.

You’ll also identify any additional assets you have, such as a 401(k), mutual funds or other investments.

Step 3: Reposition assets to fill any gaps

Now that you’ve identified any gaps between your retirement expenses and income sources, you’re ready to look at how you can cover those gaps.

You may be able to reposition some of your financial assets to create guaranteed income in retirement. Financial products like annuities can provide a steady, predictable source of income for life, no matter how the stock market performs or how long you live.

Once you’ve created the guaranteed income needed to meet your retirement goals, your remaining assets can be used to fund additional expenses as they come up.

Talk with your financial professional about your retirement goals, assets and expenses. Need helping finding a financial professional? We can help you find someone in your area.