Today’s question is: “What is a retirement plan?” The financial world is often filled with confusing jargon. Jake Doser, CFP®, CPWA® joins the Money Wisdom Question Series to break it down and provide clarity.

Retirement Plan Considerations

A retirement plan starts with understanding your goals for retirement. When do you want to retire, and what do you envision your retirement lifestyle to look like? Once you have a retirement date in mind, the next step is to assess whether you’ve saved enough to supplement sources like Social Security and pensions. This is crucial for crafting the retirement lifestyle you desire.

Do You Have Any Financial Dependents?

Another important consideration is any financially dependent individuals, such as a spouse or an adult child. If something happens to you, will they have enough resources—through life insurance, long-term care insurance, or investments—to meet their needs?

Where Will Your Retirement Income Come From?

Next, evaluate whether your investments are set up to provide a steady income during retirement. You need to diversify your investments to avoid over-reliance on a single asset that may fluctuate. Proper diversification ensures a more stable income stream and protects against market volatility.

In retirement, the focus shifts from merely growing your wealth to also drawing and preserving it. Planning for shorter-term goals, like vacations and bucket list items, and unexpected events, such as medical emergencies, is vital to ensure your overall retirement plan remains intact.

Leaving a Legacy

Finally, consider your legacy. If you aim to leave something for the next generation or charities, make sure your early retirement income strategy doesn’t undermine these long-term goals.

A cohesive plan that aligns with your personal objectives is key. It’s important to regularly meet with your financial advisor to make sure your current plan is still aligned with your goals and make any necessary adjustments along the way.