By Michael Torney, CFP, J.D., LL.M.

It’s an unusual time for people approaching retirement. While everyone wants to know if they are financially ready to retire, rising inflation and a slumping stock market may be fueling doubts. Some – especially those with a solid financial plan – may wonder if they need to keep working longer until there is more financial and geopolitical stability.

I’ve worked with many individuals and couples who needed help to feel financially secure in retirement. Many have taken an initial stab at planning, taking online financial “quizzes” and running numbers through calculators to find answers.

For anyone in this position, here is a list of recommendations to begin the retirement planning process.

Understand Your Financial Position

Start by answering a few questions; the answers will help serve as the foundation of any plan. The questions include:

  • What assets do you own that can be used to fund retirement?
  • How much do you plan to spend each month in today’s dollars?
  • What kind of lifestyle do you want in retirement?
  • How long will your finances sustain you?
  • Do you want to leave money for your children and grandchildren?

With this information, a financial advisor can develop a comprehensive financial plan. To ensure that a person doesn’t run out of money in retirement, the plan is built for each person’s life expectancy. Life expectancy is often higher than what people might think – according to the Social Security Administration, there’s a 30% chance that men will live to age 92 and women to age 94. Families need to ensure that their portfolios can sustain living 20-30 after retirement.

Should You Budget or Track Spending?

Many people don’t have a formal budget. That’s ok – budgeting can be helpful for some and emotionally draining for others. But it’s important to understand what makes up current spending in order to understand what spending looks like in retirement.

One way to build the financial plan is to assume spending is the same during working years and retirement. This assumption, though not exact, provides for some flexibility if anything changes – an important part of building a 30-year plan.

Gather a List of Specific Investment and Assets

Next, look at your current assets. Typically, we count only the assets that meet certain criteria:

  • Assets that are investable. These include cash, stocks, bonds, and mutual funds.
  • Assets that can/will be sold for investment. A common example is a business.
  • Assets that produce income.  These can include rental properties or royalty payments.

A Financial Analysis Helps Determine You’re a Long-Term Plan

To build a plan for an individual or couple’s unique needs, financial advisors often use software programs that determine how wealth can be spread out over 20-30 years to cover all expenses. For example, one type of simulation referred to as a “Monte Carlo” analysis, considers many different scenarios to help account for different events that may impact your plan.

For example, the analysis can consider what would happen if you retire today, and the market begins a three-year bear market. Will the portfolio sustain the desired spending or run out of money?

Financial analysis provides insight into how your retirement plan will really work.  And, in an effort to make certain your plan stays on track, we analyze it annually, even during retirement.

Get Started Now

Take charge of your finances by performing a self-audit with the above questions. This will provide a baseline of information to begin developing a structured retirement plan together with your financial advisor. If you have questions or need to discuss a strategy for retirement, contact our team at Duffteam@monetagroup.com. We offer a free consultation to discuss how a comprehensive financial plan that can help serve you well now and during retirement.


© 2022 Moneta Group Investment Advisors, LLC. All rights reserved. These materials were prepared for informational purposes only based on materials deemed reliable, but the accuracy of which has not been verified. This is not an offer to sell or buy securities, nor does it represent any specific recommendation. Examples contained herein are for illustrative purposes only based on generic assumptions.  These materials do not take into consideration your personal circumstances, financial or otherwise. Past performance is not indicative of future returns. You cannot invest directly in an index. All investments are subject to a risk of loss. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision.

Monte Carlo simulations will yield different results depending on the variables inputted, and the assumptions underlying the calculation.  Any projection or other information generated as part of a Monte Carlo simulation regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results.