Top 10 Tips for Retirement Planning

1. You are responsible for having adequate assets in retirement. Even if you are covered by company pension benefits, you probably need to save on your own because:

• Company benefits may not be enough
• You could leave your job before age 65
• Benefit plans can be changed, and your assets are your own responsibility (you can't lose what you have earned, but you do not know what you might earn in the future)

2. Married women need to remember that, on average, women live longer than men and that most women outlive their husbands, often by 15 years or more. There is very often a decline in economic status in widowhood. Plan for widowhood. In addition, many marriages end in divorce, so retirement assets need to work for you either as part of a couple or alone.

3. Outliving assets is a very serious issue. While average life expectancies are in the late 80s for women, some people live to over age 100, and life spans are increasing. Organize your portfolio so that part of your retirement assets are a life income that you can't outlive.

4. Contribute the most you can to your 401(k) plan or other organization-sponsored savings plan.

5. Save early so you can maximize investment return. Develop an investment strategy that considers the term of your investments. Asset-mix is the most important driver of investment performance. Diversification is important. You do not want to invest too much of your assets in any one stock or other investment.

6. Keep score. Keep track of how much you are saving and how you are doing. A plan is only as good as its implementation and follow-up.

7. Things change after you retire. You will want to meet your dreams, but you should also be aware of risks. Some of the things to be aware of include long life spans, inflation, frailty and decline in functional status, death of a spouse, other changes in family composition and unexpected medical costs. Insurance and annuities can protect against some of these risks.

8. Decisions you make long before you retire may have an effect on your retirement security. They include taking a job, leaving a job, getting married, getting divorced, etc.

9. Keeping your skills up-to-date is very important to your security. Good retirement benefits depend on having money to save and/or good earnings.

10. Don't forget about medical and disability coverage and protection. Disability protection is often overlooked. Medical coverage after retirement and before age 65 may be a big problem if you do.

Questions to Ask for Retirement Planning

• Do you know how much you will need for retirement? Do you have a program in place to get you there?

• Do you have a method of keep track of your plan and assets? Can you measure annual progress in meeting goals?

• Have you organized your portfolio so that part of your retirement assets are a life income that you (and your spouse) can't outlive?

• Investment needs change when you are planning to draw down your account balance to meet regular living expenses and special needs. Have you considered when you plan to draw down your account balance and how it might be invested?

• For couples: will your plan work regardless of who dies first and how long the survivor may live?

• Have you figured out when you can retire and when you want to retire? 

Things change after you retire. You will want to meet your dreams, but you should also be aware of risks. Some of the things to be aware of include long life spans, inflation, frailty and decline in functional status, death of a spouse, other changes in family composition and unexpected medical costs. Insurance and annuities can protect against some of these risks.

Do you have a plan for meeting post-retirement risks?

• Will your retirement plan include work after retirement? If so, are you maintaining marketable skills?

• Some employers offer medical coverage after retirement but most don't. Medicare provides basic medical coverage after age 65, but it does not cover most long-term care. Medical coverage after retirement and before age 65 may be a big problem if you do not have coverage from an employer.

How do you plan to secure medical coverage after retirement?

• Do you have a back-up plan if your job is phased out before you planned to retire, or if your health gets worse and you cannot continue working?