Posted by Thomas G Kinsella, ATP

Simple Tips to an Effective Retirement Plan

Simple Tips to an Effective Retirement Plan

If you do not like to work under stress, there is a way to plan your retirement process. All readers out there who do not have the luxury of becoming a retirement expert will find this guide helpful. 

The primary point is to take action as soon as possible, and this article will guide you towards making it happen.


Step 1: Plan Your Dream Vision 

This involves knowing what you want for retirement. It can be traveling around the world, buying a van and seeing different places, or reading novels at home. 

With your vision, you can estimate what you will need for retirement, making it essential to have a rough idea of what you want to do in retirement. It is the foundation of other plans that will be discussed.

Step 2: Select Your Date of Retirement 

After having an idea of what you will need during retirement, the next step is to select the proposed date or time you want to start living. 

This step is essential as it influences your pension and social security distribution amount. Also, your qualification for healthcare will determine your healthcare cost. 

Don't forget that the years you have to save and the timeline with which your savings will grow are factors of the proposed retirement date. 

Step 3: Have a Cost projection.

You also need a projected cost and revenue amount to deduce if you will have enough funds. One can commence by guessing the cost implication of your retirement plan, which necessitates having a budget. 

Try not to be stingy with your estimate inflation, and some miscellaneous items might eventually eat into your estimate. Let the current estimate serve as your benchmark. You are not looking for a precise amount, but the figure you arrive at will give you an idea on where to start.


Step 4: Deduce the Savings You Need

You also need to estimate what you have to save to meet up with your retirement plan. This will happen by matching the estimated income with your projected expenses using these rules as a guide:

  • Sum the estimated Social Security with the defined benefit pension using your estimated retirement date as a base

  • Remove this from your entire estimated expenses. 

  • What you get is the surplus or shortfall of your income. Make sure you make up shortfalls from your savings. 

  • Estimate the savings you need to take care of income shortfall by multiplying the annual value by 25% based on a conventional 4% spending rule. One needs to build this saving level using retirement plans – IRS, 401(k), Roth. 

This step has given a savings goal you should plan towards achieving by your retirement date. You now have to build your savings plan to make it a reality.


Step 5: Build Your Savings Plan

With the estimation in the last step, remove your present saving and balance of your retirement plan to know the shortfall of your savings. 

Divide what you got by the years present for your projected retirement date from the second step to give the annual amount to save for your objective. 

If the savings goal seems excessive, you might revise your vision and estimated budget. This means that you can make up the shortfall from the retirement saving by saving extra or deciding to live on less. 



Thomas G Kinsella, ATP
Contact Member