Retirement Blueprint

Retirement Blueprint: Building Your Fiscal House on Solid Ground

In Estate Planning, Income Planning, Investment Management, Long Term Care, Retirement Thinking, Social Security, Tax Planning by Adam Cufr

If you drive by a home that’s still under construction, there’s a certain energy that it exudes.

A new house that’s still wearing just its skeletal framing and is without wiring or plumbing or sheetrock, seems to inspire wonder in us. “I wonder what that’s going to look like when it’s done?” It’s very exciting. 

Imagine if that house was being built without plans. If each tradesperson who came on site were left to their own devices, what would that house look like if it were ever finished? Would it even be structurally sound? Each person would have their own vision for the house, with one craftsman choosing to build a one-story bungalow while another a three-story Queen Anne Victorian. Without a singular vision, how could this new home not be a complete mess? 

What about your retirement? Have you considered what your retirement would look like without a financial plan underpinning the decision-making? Is one spouse hoping to live a bungalow lifestyle while the other is aspiring to live a Victorian retirement life? And what about any advisors who may be involved in the consulting process? How can they know what recommendations to make if there’s not a singular vision for what the retirees are hoping to achieve? 

As with home-building, there are basics and fundamentals that underpin a successful financial life. For a person or a couple to do well financially, the fundamentals involve living on less than is earned, avoiding the use of consumer debt, setting long-term goals, and avoiding presuming upon the future. When these principles are adhered to, there’s a very good chance of seeing some level of financial success. When these principles are violated, probabilities of success begin to fall. So, when building a long-term retirement strategy, it behooves a person to heed these principles when crafting the plan. 

A financial blueprint for a retiring person or couple should involve some elements of each of these four dimensions: income planning, investment strategy, tax sensitivity, and estate planning. When these have all been reviewed, discussed, measured, and implemented, there’s a much greater chance of a successful retirement than when these elements are either assumed or ignored. That would be like building walls on top of a sand foundation; it may last, but it’s quite unlikely once the first big storm hits.

As an example, the income planning dimension can make or break a retirement. Specifically, beyond social security income or a pension, is the plan to withdraw income needs from risk-based investments like stocks and bonds, or should an income annuity be part of the income plan? Just this one decision invites significant nuance and elements of risk that once decided, can have an enormous impact on retirement confidence and well-being. 

The various dimensions of retirement planning should be considered and ideally distilled into a written financial plan, much like a blueprint for a new house.  Once a plan is agreed upon and designed, all parties now have a frame of reference for each decision that’s made and even changes that will inevitably occur. Without a blueprint, the outcome of the project, whether it be a house or a retirement, is left to whims and winds. You deserve better than that.