Successful Retirement Planning


It’s been said that “failing to plan is planning to fail.” This is an eternal truth when it comes to retirement planning.

This is also a truth that is especially relevant to retirement planning for women. Why? Because women are prone to some pretty major financial risks at statistically higher rates than are men (e.g., greater longevity, lower lifetime earnings, higher incidence of disability, more likely to give care to family members, become single and end up in poverty). This all means that sound, comprehensive retirement for women is critically important.

Sadly, many of us are unprepared to retire on our schedule or someone else’s. A recent study from the Employee Benefit Research Institute found that almost half of Americans retire sooner than they planned. Of these, 56% cited health changes, disability and family caregiving as primary reasons. Just 24% stated they were able to afford earlier retirement and 10% said they wanted to do something else.[i] Lesson learned? We need to plan for both the unexpected and the expected.

A Word about the Word “Retirement”

The concept of retirement has morphed significantly over the last fifty years. It used to mean leaving work at age 65, and is even defined as to “withdraw, go away, go out, exit, make an exit, take oneself off, depart, decamp, adjourn…”

How appealing is that? Not very. Many of us see working and being active, vibrant and relevant throughout our entire lifetimes.

As a fledgling financial planner at IDS (now Ameriprise), I was taught to reframe “retirement” as “financial independence” many years ago. Here’s how it went: “Financial independence is that point in time when work is optional and you have sufficient capital to live with dignity for the rest of your life.” Most clients that I worked with over the years could never could envision themselves “retiring” but wanted to plan for being financially independent. I will use both terms interchangeably here but encourage you to think about “financial independence” as the goal and what that looks like for you.

Concern to Action

Studies show time and again that great majorities of Americans are concerned about planning for financial independence (retirement) but don’t go any farther than that. Selecting an investment product and contribution level is the furthest most get and some action is better than none. Our choices and selections might be informed by some financial planning prognosticator or other. These help us pick the “arrows” for retirement funding, but this is not the same as planning. It’s like trying to hit the retirement bullseye using a “ready, shoot, aim” approach.

A financial independence or “retirement plan” if you will, requires a disciplined planning process. The process begins with crystallizing goals and gathering information, to analysis and strategy development, implementation and monitoring.

Five Action Items

  1. Reframe “Retirement”

I encourage clients and students to think less about “retirement” in the conventional sense and think more about being “financially independent” since many view themselves working late in life. Financial independence means having the option, not the requirement to work. It is that point in time when you have sufficient assets to provide target income for the rest of your life, your spouse’s life and the legacy you wish to leave others.

  1. Visualize and Quantify Income

Next, identify your desired lifestyle, interests and passions to explore.  Will you move, downsize, provide funds to children and/or charity or pursue other lifelong goals? How will life fundamentally change from what it is today?  Quantify these changes in your monthly expenses. Some use a simple income replacement formula for quantifying income needs using a 70 or 80% replacement ratio. (While I have serious concerns about the limitations of this approach, it’s a starting point at the very least.)

  1. Do the Math

Thanks to really great calculators that are widely available for free online, running a simple retirement projection is quick and easy. Here is a link to a basic retirement savings calculator to get you started. (INSERT OUR WEBSITE CALCULATOR HERE.)

While online calculators are limited in their capabilities (for example, they don’t evaluate the impact of higher inflation on expense line items like health care), they can be an important step in the planning process. How? Because they increase awareness of what it might take in capital assets to fund retirement/independence. Even if you discover that funding gaps are deep and wide, increasing clarity gives you greater control and more purposeful action. It’s better to have this information early so you can adjust your thinking, plan, and course of action, as necessary.

  1. Diversify Your Retirement Resources

We all know the wise old saying about not putting all of our eggs in one basket. So it goes with diversifying resources for financial independence. Diverting income from the business to build up personal retirement/independence savings is essential to managing risk and accumulating resources, sometimes on a tax-favored basis.

Putting in place a basic retirement plan (like Solo 401(k), SIMPLE 401(k), SEP IRA, SIMPLE IRA) is a generally recognized first step. Initially, you want to consider well-diversified funding mechanisms within those plans like low-cost target-date mutual funds that give the benefits of strategic asset allocation, rebalancing to a target date (like financial independence when the funds are presumably redeemed) with relatively minimal expense

  1. Consider Hiring a Financial Planner

A range of resource studies indicates that this is an important step for many, especially when creating a comprehensive, written plan.  In addition, it has been my experience as a practitioner, academic and student, that retirement planning for business owners can be very complex. Even if you believe you are well on your way, the value of a second opinion cannot be overstated.

All that said, be very careful in your choices here, especially when seeking out a “financial planner” since the use of that term is not currently regulated. I find the “10 Questions to Ask When Choosing a Financial Advisor” by the Certified Financial Planner® Board really gets at the important qualifications you should be looking for.  Here’s a link to that tool:




[i] The 2017 Retirement Confidence Survey, Greenwald, Copeland, VanDerhei, EBRI Education and Research Fund 2 Copyright© 2017, Employee Benefit Research Institute

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