INSIGHT

Financial planning for retirement 

Michael Watson, Sergio Fernandez • May 1, 2025

Services: Wealth Management

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Recent data shows that roughly two-thirds of Americans are unsure about their retirement readiness. While this statistic is concerning, proper financial planning can help bridge the gap between uncertainty and confidence in your retirement journey.  

If You Fail to Plan, You Are Planning to Fail” – Benjamin Franklin 

Let’s explore the key elements of creating a robust retirement plan that can help secure your financial future.  

Understanding your retirement needs  

Planning for retirement requires a clear understanding of your future financial needs. Most financial professionals suggest aiming to replace 70-85% of your pre-retirement income to maintain your standard of living. This includes accounting for essential expenses like housing and utilities, as well as discretionary spending for the lifestyle you envision.  

Your retirement budget should factor in both predictable costs and potential variables. Essential expenses will include housing, utilities, and day-to-day living costs, while discretionary spending might cover travel, hobbies, and entertainment. It’s also crucial to consider healthcare costs, which typically increase as you age, and maintain emergency funds for unexpected expenses. The tax implications of different retirement income sources will also play a significant role in your planning.  

Building your retirement income strategy  

A successful retirement plan typically draws from multiple income sources, creating a diversified income stream that can help ensure financial stability. Social Security benefits form a foundation for most retirees— depending on your income level during your working years, Social Security benefits may replace 40% of an annual worker’s income. But understanding when to claim these benefits is crucial – the longer you wait (up to age 70), the higher your monthly payments will be.  

Employer-sponsored retirement plans like 401(k)s and individual retirement accounts (IRAs) often form the backbone of retirement savings. These accounts offer tax advantages and, in many cases, employer matching contributions that can significantly boost your retirement savings. Personal savings and investments can provide additional flexibility, while those with pension benefits need to carefully consider their options for maximizing this guaranteed income source.  

7 key steps in retirement planning  

Creating a reliable retirement strategy requires a systematic approach that addresses every aspect of your financial future. By breaking down the planning process into manageable steps, you can build a comprehensive plan that evolves with your needs. Here’s how to get started:  

1. Assess your current financial situation  

Before you can plan for tomorrow, you need a clear picture of where you stand today. Begin by taking a comprehensive inventory of your financial life, including all retirement accounts, personal savings, investments, expected Social Security benefits, and current debts.  

2. Define your retirement goals  

Your retirement plan should reflect your personal vision for the future. Consider not just when you want to retire, but what kind of lifestyle you want to maintain, where you plan to live, and whether you might want to continue working part-time.  

3. Calculate expected retirement expenses  

Understanding your future financial needs is crucial for effective planning. Start with your current monthly expenses as a baseline, then adjust for anticipated lifestyle changes, healthcare costs, and inflation over time. For many, this may also include the cost of caring for a loved one.  

4. Evaluate your retirement savings  

Once you’ve defined your goals and expected expenses, it’s time to determine if your current savings strategy will get you there. Review your retirement account balances, savings rate, savings type (pre-tax vs. after tax), and whether you’re taking full advantage of employer matching programs.  You should also evaluate how your portfolio is allocated, and whether your current allocation is suitable for your risk tolerance and time horizon. 

5. Develop a tax-efficient withdrawal strategy  

Smart tax planning now can help your retirement savings last longer. Create a coordinated withdrawal strategy that considers the tax implications of different account types – from tax-deferred 401(k)s to tax-free Roth IRAs and taxable investment accounts. 

6. Create a debt management plan  

Entering retirement with minimal debt gives you more flexibility and security. Focus on paying down high-interest debt first, then develop a strategy for handling longer-term obligations like mortgages.  

7. Establish regular review schedule  

Your retirement plan isn’t a static document – it should evolve as your life changes. Schedule annual reviews of your plan and make adjustments following major life events or changes in your financial situation.  

Remember, while these steps provide a framework for retirement planning, each person’s journey is unique. At BPM, we can help you navigate this process and create a personalized strategy that aligns with your specific goals and circumstances.  

Working with financial professionals  

Professional guidance can provide invaluable insights and help ensure your retirement planning addresses all crucial aspects of your financial future. A qualified advisor can help develop a comprehensive retirement strategy that aligns with your goals and circumstances. This includes optimizing your investment portfolio, navigating tax implications, and adjusting your plan as circumstances change.  

Your advisor can also provide objective advice during market volatility, helping you maintain a long-term perspective and avoid emotional decision-making that could impact your retirement security. Regular reviews with your advisor ensure your plan remains on track and adapts to changing market conditions and personal circumstances.  

Taking action with BPM  

Regardless of your age or career stage, the time to start planning for retirement is now. Building a secure retirement requires consistent effort and regular review of your progress. Start by maximizing contributions to retirement accounts where possible and create a realistic budget that balances current needs with future goals.  

You should review and adjust your retirement strategy regularly to ensure it continues to align with your objectives. This includes addressing any gaps in your retirement savings and adjusting your investment strategy as needed. Remember that retirement planning isn’t just about reaching a certain age – it’s about ensuring your finances can support your desired lifestyle after you stop working.  

By taking a proactive approach to retirement planning today, you can work toward the confident, secure retirement you envision. At BPM, our financial advisory team is ready to help you create and implement a personalized strategy for your retirement future. Contact us to begin building your path to a confident retirement.  

Securities offered through Valmark Securities, Inc. Member FINRA, SIPC | Investment Advisory services offered through BPM Wealth Advisors, LLC and/or Valmark Advisers, Inc. a SEC Registered Investment Advisor. BPM LLP and BPM Wealth Advisors, LLC are entities separate from Valmark Securities, Inc. and Valmark Advisers, Inc.