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9 Steps to a Successful Retirement Plan

An expert's guide to meet your money goals and love your life

By Philip Moeller

(This article previously appeared on

Your retirement will benefit from an informed understanding of key numbers, such as: How big is your nest egg? How much money will you need to live on? How much should you draw from your funds each year? How long do you expect to live?

Whether your retirement is successful, however, will depend not so much on these numbers but on whether your later years fulfill your emotional needs.

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Retirement Goals Beyond Money

Money is important to happiness, of course. But there are other requirements, too, including feeling secure about your future; not being exposed to investment risks you consider excessive; satisfying your concerns and goals for the legacy you wish to leave behind and feeling you’ve run the best race of your life.

These are emotional and aspirational goals — and you can’t put numbers to them. Yet, everyone has them, so it’s important to factor them into your retirement savings, investing and spending plans.

I’ve written gobs of stories about “can’t miss” and “best practices” retirement plans, speaking with retirement experts across the spectrum. From them, I’ve fashioned a nine-step approach to retirement that I like so well, I’ve adopted it for my own retirement plan.

A Starting Place for You

My advice to you is to use this approach as a starting place. Adopt it, modify, or toss it out. But by all means, think about it and use it to help you make your own retirement plans.

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My nine-step plan is shaped by my risk tolerances (low) and desire for financial security (high). It creates a 100 percent likelihood that I will not outlive my money.

It is also a strategy that includes the needs of my wife and myself. We are willing to leave some money on the table in the interest of security. And we also are willing to defer some retirement income and thus “lose” money should we die earlier than we hope.

My 9-Step Retirement Plan

Step 1: Add up your sources of guaranteed retirement income — Social Security and any pensions. In terms of longevity risk, the odds favor at least one member of a 65-year old couple living into their 90s. Therefore, give serious thought to deferring Social Security until age 70, when your benefits reach their maximum value.

Beyond being guaranteed, Social Security payments also increase each year to reflect the prior year’s inflation. They are, quite simply, the very best retirement dollars around. And I don’t buy all the gloom-and-doom stories about the program’s demise. Social Security will be here for a long, long time.


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Step 2: Unless you know a shorter life is in the cards, opt for joint survivorship payments on any pension proceeds. They will be smaller than payments that would stop upon your death or your spouse’s. But both pensions will continue as long as either of you live. The goal here is to maximize security, not dollars.

Step 3: Tote up how much guaranteed money you will receive every month once you stop working. This could be a long time off or, depending on an adverse health or other life event, just around the corner.

Step 4: Build a detailed record of household spending, perhaps divided into major spending buckets — mortgage, utilities, cars, insurance, out-of-pocket healthcare, etc. Make note of required versus discretionary spending.

Step 5: Compare your projected guaranteed retirement payments with your current required spending needs. The goal here is for the two numbers to match. If they do, then in a worst-case world, you will always have enough money to keep a roof over your head and maintain a lifestyle that is close to the one you now have.

Step 6: If your fixed income today is projected to be smaller than your current fixed expenses, you will need to downsize. This might involve your home. Getting out from under mortgage and upkeep costs is the largest for most people.

Step 7: If downsizing doesn’t get you there, consider using a portion of your nest egg to get more guaranteed lifetime income by purchasing an immediate annuity that will close the gap. This would reduce your savings, of course, but it scores very, very high on the “sleep at night” scale. Consider a longevity annuity as part of your solution.

Step 8: Having balanced your fixed income and expenses, you can tap your investment portfolio to fund the gratifying things you want to do during your retirement years. If market returns are good, you will be able to do more. And during the inevitable periods of poor market performance, you can reduce discretionary spending without putting your basic standard of living at risk.

Step 9: Set aside a portion of your savings against the day when one of you dies, so it can compensate for the loss of one Social Security benefit. If you want to leave a financial legacy, set it aside here as well. If you still own a home after downsizing, use your equity as a piggy bank you hope never to break open. But it will be there for health care and other unforeseen emergencies.

That's my plan. What's yours?

Philip Moeller is an expert on retirement, aging, and health. He is an award-winning business journalist and a research fellow at the Sloan Center on Aging & Work at Boston College. Reach him at [email protected] or @PhilMoeller on Twitter.

Philip Moeller
Philip Moeller authors Simon & Schuster's "Get What's Yours" series of books about Social Security, Medicare and health care. He has written extensively about retirement and aging, most recently for PBS NewsHour, Money and U.S. News & World Report. Email him at [email protected]. Read More
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