How Retirement Can Impact Your Financial Planning

Jan 20, 2020

As you already know, a crucial aspect of financial success is building a plan that takes into consideration your unique financial goals and priorities and accounts for the many ups and downs that come with life. Though many of life’s changes can be unexpected, one goal that should always be on our planning horizon is retirement or your financial freedom. While each of us may retire at a different age and have a different idea of what retirement may look like, we are all likely working towards a day when we can put aside our work and step into retirement. If planned accordingly, that day will also bring changes to your financial plan that should be discussed in detail with your financial advisor.

Here are a few things to consider as you plan for retirement:

Retirement Budgeting

One of the first things to consider when thinking about retirement is exactly what you’d like your retirement to look like. Are you anticipating a low-key retirement and thus, a minimal cost of living? Or are you embarking on a decades long trip around the world? Have you paid off your housing or will you be adding to your real estate portfolio? What about your children and grandchildren? Are you planning to help pay for schooling? How about all of those hobbies and projects you have been putting off due to your busy work schedule? All of these costs can add up to more than you think and need to be accounted for in a budget to help you plan for the cost of your retirement and how much money you’ll need to support your lifestyle. This is the basis for any planning you do and will be a factor in determining the makeup of your portfolio.

Portfolio Changes

After deciding upon your ideal retirement, it’s imperative to schedule time with your financial advisor to discuss your goals and the forecast of your portfolio so that together, you can make any necessary changes to both the makeup and the diversification of your assets. Based on both your age and the outlook of your retirement, your financial advisor may suggest making no changes at all, gradual adjustments, or very large changes but together, you can ensure that you’re preparing for the type of retirement you’d like.


Similarly, you may want to consider extending your emergency fund when entering retirement. Because your income stream will be different, you may want different access to a liquid savings fund in case of emergencies. It also makes sense to plan for large expenditures, so the funds can be made available ahead of time. Be sure to discuss this with your financial advisor and to think about your near-term versus long-term goals when it comes to financial accessibility.

Insurance & Healthcare Planning

Because you are no longer working, your insurance will change. If you have retired before having access to Medicare you will need to get coverage through a different provider and you may want to consider long-term care insurance to protect yourself. Additionally, if you haven’t already prepared healthcare directive documents, this may be a good time to get your paperwork in order and discuss your choices with your spouse and immediate family. Even if you’re retiring very early, it doesn’t hurt to plan in advance and save your family the confusion or put them in the position of having to make these very difficult choices on your behalf.

Life Insurance and Estate Planning

Similarly, now is a good time to review your life insurance coverage to make sure everything is current and up to date. Because your circumstances are changing, you may need to revise your estate plan and beneficiary allotments to make sure that everything is aligned with your new financial plan. It’s best to do this all at once to ensure that no documents are at odds.

Tax Changes

Because your employment has changed, your taxes are also likely to change. Be sure to discuss your retirement with your accountant as well as your financial advisor to ensure that you are prepared for any changes to your tax structure. Together, your team can help to mitigate taxes and prepare you for the changes ahead.

We’re all working toward retirement but with a little planning, you can make sure that your financial plan is structured to carry you smoothly into the next phase. Be sure to discuss your plans with your financial advisor regularly and you’ll be ahead of the game!

Peninsula Wealth is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Peninsula Wealth and its representatives are properly licensed or exempt from licensure. This material is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Peninsula Wealth unless a client service agreement is in place. It is expressly understood that our firm will not provide accounting or legal advice nor prepare any accounting or legal documents for the implementation of your financial planning objectives.