Retirement documents needed

Retirement Documents Needed For Your Retirement Plan

In a recent blog post titled, At What Age Can I Retire,”  I discussed the process of visualizing your retirement as the first step towards having a solid retirement plan. Now that you know how you would like to spend your retirement, the next step is to determine if you can afford it and what retirement documents you’ll need.

Most folks do not have a good understanding of their current financial picture, let alone how things will look in 5, 10 and 20 years. They typically don’t have financial statements prepared and haven’t estimated their financial resources for retirement. As a matter of fact, two in five Americans (43 percent) have not spoken to anyone, friends and family included, about retirement planning. What’s more, 21 percent of Americans are “not at all confident” that they will be able to reach their financial goals.

Without organizing your entire financial picture, you are greatly increasing the chances of missteps that can cost you in retirement. You won’t fully understand all of your obstacles and challenges, making it much more difficult to prepare. If you need some help, we’ve got you covered with our Free Retirement Checklist. By being organized and understanding what your current picture looks like, you will be in a position to start planning the retirement of your dreams. Let’s take a look at what retirement documents you will want to collect prior to making any major financial decisions.

Important financial retirement documents


Before you can make any decisions, you first need a good accounting of all of your financial resources. You will want to review your most recent tax return since it summarizes your income and tax liabilities.  Understanding every aspect of your income sources is instrumental in determining how to create the most the tax-efficient income possible. After all, the less taxes you pay the more you have to spend.

The biggest portion of most retirees’ income comes from fixed income sources such as Social Security and pensions. You can access your benefit information from the Social Security Administration by visiting their website here. For those with vested pension benefits, you should request a benefit statement from your human resources department to fully understand all of your plan distribution options. Other fixed income sources in retirement can be positive cash flow from rental real estate, annual recurring gifts from parents or grandparents and annuities. The following retirement documents will contain the information that you need as it pertains to your income sources:

  • Most recent tax return
  • Social Security benefit statements
  • Pension benefit statements
  • Annuity illustrations


Once you have thoroughly identified your fixed income sources, it’s time to take a look at what you own and what you owe. In determining what assets you have as resources for retirement, one of the most important factors is to understand how an asset will be taxed upon distribution. For example, distributions from a taxable account are subject to capital gains tax rates vs. a tax-deferred account which are subject to ordinary income tax rates. So it’s important to understand the details of your investment holdings such as the cost basis of securities you own. Throughout retirement, you will constantly be monitoring the value of these securities as you draw down some of your assets for income needs. You will want to gather the most recent statements from these retirement documents:

  • Bank statements
  • Brokerage statements
  • Retirement account statements
  • Permanent life insurance statements
Assets in retirement


In addition to your asset statements, you will need to collect statements on all of your liabilities. Details such as interest rates, payment amounts, and terms of payment will be necessary to know when you begin your analysis. Are there any refinancing or debt consolidation strategies that could strengthen your cash flows? Understanding when amortized debts such as mortgages will be paid off will give you a better perspective on how much you can spend during different time periods throughout retirement. You will need the following statements:

  • Mortgage loans
  • Student loans
  • Auto loans
  • Revolving lines of credit
  • Personal loans

Wealth Protection

One of the most common questions I get as a financial planner is how much insurance one should have. Insurance is essentially a transfer of risk to a financial institution. We purchase insurance for many types of risks, but it makes the most sense to protect yourself against events that have low odds of occurrence, but have high consequences. We purchase life and disability insurance to protect against loss of income even though the odds of using these benefits are low. We purchase liability coverage on our homes and autos to protect us against significant personal liability risks such as litigation. You are going to want to evaluate how much protection is needed from these risks in retirement since these unexpected events can completely derail your retirement plans. You will need to gather:

  • Life insurance statements
  • Long term care insurance statements
  • Disability insurance statements (if a spouse is still working)
  • Auto policies
  • Homeowners and rental insurance policies

Wealth Transfer

We all want to ensure that our loved ones are taken care of in the event of unexpected death. If you don’t have a proper estate plan in place, then your assets may be subject to probate, a process where your state of residence determines the distribution of your estate. Having an estate plan and ensuring that all of your accounts are properly titled with the appropriate beneficiary designations is imperative for an efficient transfer of wealth. Some of the retirement documents you want to have in place are:

  • Living trust
  • Wills
  • Power of attorney for health
  • Power of attorney for finance
  • Review of all account beneficiary designations
  • Review of life insurance beneficiary designations

While certainly not the most enjoyable part of creating your retirement plan, gathering and organizing all of your retirement documents is necessary to ensure you have accurate data prior to preparing any of your financial statements. These financial statements such as your personal balance sheet and personal income statement will be crucial in analyzing your financial situation and determining the best strategies in every facet of your financial picture. For a complete guide to ensure you don’t miss any important retirement documents, download your Free Retirement Checklist. In my next post, I’ll explain which financial statements you will want to put together and how they will help you plan your optimal retirement.

How Conservative Should I Be As I Get Closer To Retirement?

How Conservative Should I Be As I Get Closer To Retirement?

Money management guru and famed financial presenter Robert Kiyosaki is often quoted as saying “It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”

His statement is simple, yet simultaneously multifaceted. It informs us that we need not to be rich, but rather, we need to be wise. It insinuates that it’s not wealth that matters, but rather how prudent you are in saving the money you make. Finally, it apprises us of the notion that we need to make our money work for us, as well as to hold on to that money for the generations to come.

Like many things in life, Kiyosaki’s advice is easier said than done. On paper, it makes perfect sense. In reality, retirement planning is a difficult endeavor that requires discipline, restraint, and extensive planning.

Cut costs in retirement

Retirement: Spend Less, Keep More

The concept of spending less clearly indicates that we will then have more money in our pockets. However, spending less requires constraint. It means we don’t always get to buy the things we want. It means that our standard of living won’t always be picturesque. It means we don’t aggressively dump our money into the stock market hoping for a potentially enormous return and ultimately risking decades or even a lifetime of savings.

It also means that we must be conservative in our financial lives, making prudent monetary choices, investing intelligently, and diligently strategizing, especially as we get closer to retirement. However, fiscal conservatism is not a popular concept amongst the younger set. The high degree of interest in financial conservatism is from those entering the phase of their senior retirement plan.

Aggressive Spending: The Antithesis to Financial Conservatism

Today, social media is brimming with pictures of people in their 20s and 30s posing with their new expensive purchases, many of us don’t shake our heads in disgust – rather we feel envious of their seemingly grandiose lifestyle.

Living in a financially aggressive fashion is commonplace and is exhibited by individuals from every type of socioeconomic background. From the call-center operator making $14.75 an hour who blew $10,000 on a snakeskin Hermes handbag to make herself feel chic, to the newly minted law school graduate who heads down to the BMW dealership and gets himself a 7-series BMW, aggressive spending gives us the various toys and accouterment to make ourselves feel good about ourselves and our lives.

Living the high life may make us feel good in our 30s or 40s, but as we get older and closer to retirement, there eventually comes a cold, stark, and unyielding reality. We don’t have any savings to fall back on in times of sickness or catastrophe. It makes our golden years a little bit less golden.

A couple enjoying their retirement

Readying for Retirement

Financial intelligence and conservatism are more crucial now than ever. Whether you are in your 30s or 40s, living practically isn’t enough. It’s about carrying out financial practices that come from research and strategy – finding investment opportunities that will yield a return and provide us with the opportunity to make our money work for us as we get closer to retirement.

Concepts such as compound interest bolster our time, energy, and overall finances by adding to our collective pot of gold without having to lift a finger. The sooner you begin investing for retirement; the sooner compound interest begins its powerful effects that can possibly pay off for you enormously when you get older.

Admittedly, articles telling adults in their 30s or 40s to be fiscally conservative is not going to be among the hottest of topics. It’s those reaching retirement age that the fire of interest begins. As we grow older, we want to feel more secure and to know that we have something to fall back on in times of strife.

So How Conservative Should You be as You Get Closer to Retirement?

The answer is clear: you should be as conservative as you can as you are getting closer to retirement. No one is saying that you need to live a bare-bones lifestyle. However, when you are in your 50s and 60s, making extravagant purchases could be viewed as impractical and in some cases, could potentially lower the quality of your life.

Live comfortably, yet conservatively as you get closer to retirement. When it comes to making changes to your investment portfolio, it’s important to understand what you need your portfolio to do for you. For example, if you know you will need to withdraw $180k/year to supplement your income, you will want to ensure that this part of your portfolio is invested in more conservative assets such as bonds. This way, when there is a stock market downturn, you can withdraw from the stable part of your portfolio instead of selling stocks when they are lower.

As you grow older, many financial experts will tell you that you should incorporate more bonds in your portfolio to protect your money. That doesn’t mean to stop investing though; it just means to invest in a more conservative fashion.

Be smart and start being financially prudent today. Work with a financial advisor to build your own personal portfolio by increasing your savings, developing the proper budget, and ensure that you have the right tax-efficient withdrawal strategy. With every move you make towards protecting your money and assets as you grow older, you ensure not only the quality of life you want and deserve but the unbeatable feeling of having forged your own financial destiny.

What Age Can I Retire?


I once worked with a client in San Diego who retired from his county municipality job after working there for 30 years. He was in his early 50’s, owned a few rental properties and had elected to start drawing on his pension plan to fund his early retirement. Right before we began our financial planning engagement, he’d taken a position in the private sector where he was working roughly 10-12 hours per day. Although he already had a steady income in early retirement allowing him to pursue other hobbies and interests, he never really gave much thought to what retirement in his early 50’s would be like. So, he did what many of us do – he decided to continue on with his new job.

Are You Wondering What Age Can I Retire?

In the last meeting of our financial planning engagement, he said, “Danny, I have some news that may impact the financial plan. I quit my job.” He explained that the extra 2-4 hours he spent working and the fact that he was paying roughly 40% of his employment income to taxes was not a worthy tradeoff for the decrease in his quality of life. So what are some questions that he should have asked prior to retiring early?

  • If I decide to retire early, what would I want to do with all my spare time?
  • How will this decision affect my spouse and family?
  • How much monthly income do I need to retire early and what is the proper life expectancy I should use when determining my income needs?
  • Have I included the replacement cost of employee benefits such as health and life insurance benefits?
  • If I start collecting my pension plan and continue working, how much will my income tax increase?

Approaching retirement age

Why Do You Want To Retire?

Has your work life suffered from a management/reorganization change? Or is it the desire to relocate for a fresh change of scenery or lower cost of living (a consideration for many of my clients in California)? Maybe be closer to kids and grandchildren? Whatever your reasons are, it’s necessary to sit down and write them down so you are clear on your goals. Figuring out why you want to retire is more important than figuring out how or when. When I ask folks when they want to retire, the most common answer is age 65. When I ask why, the common answer is it sounds like a good age. I realized that most people were associating the “appropriate” retirement age with the Full Retirement Age for Social Security. Ironically, for most baby boomers, that age is now 67, but most people still tell me 65. This further illustrates that most prospective retirees aren’t doing enough to define and visualize what retirement will really be like. Once retired, it’s difficult for many to re-enter the workforce at the same level of compensation/status so it’s extremely important to understand the reasons for retirement before you commit:

  • Is either spouse planning to go back to work full or part time?
  • Will we be volunteering for any charitable/philanthropic organizations?
  • What are some hobbies or productive tasks that you enjoy?
  • What are areas of learning or growing that you are truly passionate about?
  • Are there any current health issues that could progress and inhibit our ability to enjoy retirement in our later years (how does this affect our current plans)?

Visualize Your Ideal Retirement

Once you’ve determined the why, the next question is what – as in, what do you plan to do with all your spare time? If every day was Saturday, what would your life look like and how would you fill your time? It’s important to consider things such as your relationship with your spouse and what kind of interests/activities you both have in common with one another.

Try this out: Close your eyes and picture yourself retired after one month. I say after one month, because it will take a little time to tie up loose ends and really start getting settled in your everyday routine. Picture yourself waking up on a Monday and envision what your ideal morning looks like now that you’re in retirement. Think about times of the day when you’re by yourself and times when your spouse or family may be around. How often do you leave the house and what will you be doing to occupy your time? How often will you be dining out? Once you have an idea of what your typical day will look like, now it’s time to start thinking about your other lifestyle goals in retirement.

Traveling in general is a common goal for many retirees and should be included in a retirement budget. I’ve had clients without children who planned to live abroad full time in retirement. I’ve had other clients who wanted to purchase a second property as a vacation home and others who were interested in a rental property that could be used as a vacation home for part of the year. In regards to travel, it’s important to define the frequency, distance and cost of trips as you continue to determine your quality of life and spending in retirement.

Geographic proximity to children and grandchildren typically has a heavy influence on these decisions. Some desire to relocate to be closer to children and grandchildren and gain a “fresh start” on life. Being in a new environment and community as you embark upon retirement can be very enticing! On the other hand, some folks are perfectly happy with their current living situation and instead plan on making regular trips to visit family in other cities. If traveling is a goal in retirement, then here are some of the questions you will want to ask yourself:

  • Do we plan to relocate?
  • How often will we be traveling to see family?
  • How often and where would we like to travel for vacations?
  • How much do we typically spend on vacations?

Retired couple walking on beach

Preparing For the Cost of Retirement

Okay, here’s where the rubber meets the road – you’ve carefully thought out what your retirement will look like and most likely contemplated more than one scenario. This can make you feel more indecisive than you were in the first place! It’s okay, you’re still headed in the right direction. Now you need to do some research and estimate the cost for some of these scenarios. You’re essentially creating a budget – you are going to include all your housing costs and all of your fixed and variable living expenses.

Next, you have to account for how much of your income is going to taxes, and this is where things can get a little tricky. If you move to a different state, then your state and property taxes can change substantially. Also, income needs typically fluctuate in retirement as a result of the age difference between spouses. For example, one spouse may draw social security benefits earlier than their partner. Having a good understanding of what your cash flow needs will be year-to-year will give you an idea of how much your income will fluctuate and how much tax you are going to pay. The good news is that this exercise also allows you to uncover tax planning opportunities so you can pay less tax and have more income to spend in retirement!

The Next Steps

As you can see, preparing for retirement isn’t just a quantitative process – it’s actually quite the opposite. Clarifying your motivation to retire is the first step, which should be followed by visualizing your ideal life in retirement. Again, be meticulous when considering your different options and explore all the variables that impact what your lifestyle will cost. Then do some research so you have an idea of tax liabilities and other factors that may increase your outflows so you can make a better estimate of how much you need to spend. Following these steps will let help you answer the question to what age can I retire?

If you have taken the time to go through this process, you should give yourself a pat on the back for taking the first step towards planning your ideal retirement. Now that you know how much you will need to spend, it’s time to start taking inventory of your financial resources and fixed income sources to determine if your ideal retirement scenario is feasible. I will address how to do this properly in my next post, but in the meantime, you can read more about every step of the retirement planning process by getting your Free Retirement Checklist here.