Retirement Readiness: After the Last Paycheck

Published 02/13/2020

By Steve Martin, CFP®

In this article, I discuss the topic of retirement readiness focusing on two monumental days in every professional’s life: the last day of work and the first day of retirement. The changes that will occur in that short period of time are more than financial but having a plan in place on Day One eases the transition from working life to retirement. As I’ve often said, if you want to take a vacation, you can hop in your car and just start driving, and you will surely end up somewhere. But if there is a destination you really want to reach, you better use a map.

When the last paycheck has been cashed, the next phase of your life will begin. Your days are no longer defined by daily commutes and calendar reminders. To enjoy the rest of your life on your terms, you need a thoughtfully crafted plan that establishes your financial goals as a retiree. 

One of the most common reasons why people enter retirement without a plan is they think they have saved enough, and everything will work out just fine. However, there are many important matters in addition to retirement savings that should be reviewed. This document outlines essential planning considerations for those nearing or already enjoying retirement.

Consideration 1: Decide How to Replace Your Income

A plan to replace income should do all of the following: 

·       Provide consistent income over time that cannot be outlived

·       Maximize Social Security benefits

·       Protect income from inflation and reduce income volatility

·       Account for unexpected expenses

For Further Discussion: It is important to design a realistic withdrawal policy statement to

determine how much you can safely withdraw and spend each year.


Consideration 2: Sources of Income

There are three main sources of income for retirees:

·       Fixed Sources of Income (including Social Security, pensions, annuities and part-time


·       Savings and Investments (including IRAs, Roth IRAs, employer sponsored retirement plans, stock options and taxable investments)

·       Other Sources of Income (including insurance, reverse mortgages and inheritance)


For Further Discussion: Taxes still matter, even for retirees who are not working full-time. Areas to address are required minimum distributions, Roth conversions, charitable giving, asset location and other strategies to minimize taxes.


Consideration 3: Longevity and Health Care Costs

With medical advances and an emphasis on healthy living, on average, we are living longer. This means retirees may need their income to last more than 25 years. When we factor in rising health care costs, it is critical for a plan to address health care expenses.


According to a report from Fidelity, “An average retired couple age 65 in 2019 may need approximately $285,000 saved (after tax) to cover health care expenses in retirement.”1 Note that this estimate does not include long-term care costs.


For Further Discussion: Other issues related to longevity include planning for potential housing changes during retirement, selecting appropriate caregivers in the event of illness or disability and making sure estate plans are updated regularly.


When You Plan for Retirement, Good Things Happen

Sometimes, people are not quite sure how to get started, so they assume (and hope) that everything will work out in one way or another. A financial advisor can help by providing structure and guidance throughout the planning process.

Retirement is more than a goal, it is a destination. With a focus on building a plan, we help investors make prudent choices to get where they want to go, so they are ready to enjoy a comfortable retirement.



1 Fidelity Viewpoints, “How to Plan for Rising Health Care Costs.” Fidelity, April 1, 2019. 





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