Milestones in Focus: Financial Planning Timeline: Retirement

October 11, 2021

You’ve made it! Congratulations on a long and successful career. Goodbye stressors, hello autopilot… right? Not so fast. Retirement can be an overwhelming and daunting aspect in one’s life and is not to be taken lightly. Questions surrounding healthcare, social security, life and long-term care policies, 401(k) rollovers, required minimum distributions and overall cash flow can create “analysis paralysis” in even the most financially solid households. 

As we walk through the following topics, keep in mind these decisions are not to be made in isolation and should be coordinated with your financial planner to help smooth out the transition into your retirement. 

Cash Flow

Having a good perspective and understanding of your monthly or annual cash flow needs and expected sources of income to meet those needs will provide you a sound basis for making the decision to retire. Knowing which of those expenses are fixed or discretionary, how inflation will impact your expenses and keeping a lid on mortgage or other debt will give you confidence as you transition to this stage of life.  Make sure your projections are realistic, allow for flexibility, and maintain a cushion to deal with the unexpected expenses that seem to come all too frequently.


Medicare benefit enrollment begins at age 65 and consists of four parts: A, B, C, and D. When working past the age of 65, private coverages may remain in effect; however, some policies or employers can mandate that employee policies convert over to Medicare upon reaching the age of 65. 

Medicare Part A covers costs billed by hospitals or similar inpatient or inpatient-like settings, such as some skilled nursing care, hospice, and some home-based healthcare. Care provided through Part A covers rehabilitative services only and is not a substitute for long-term care insurance.

Medicare Part B covers physician fees and outpatient services. The premiums associated with part B are based on your Adjusted Gross Income from two years prior (e.g. 2021 premiums are based off 2019 returns).

Medicare Part C Advantage Plans are health plan options on the open market that include a subsidized premium and are frequently offered as an HMO-style, comprehensive replacement for traditional Medicare.

Medicare Part D covers prescription drug needs in retirement. 

Medicare insurance is the base health benefit for the vast majority of American retirees, but does leave some gaps in coverage for which you may ultimately be responsible. Deductibles, copayments, and coinsurance can still be costly in the case of an unforeseen medical emergency. Medigap insurance is often recommended to help fill the aforementioned “gaps” in coverage and may be a worthwhile addition to your Medicare plan.  AARP currently estimates that the average married couple will spend approximately $225,000 over 20 years of retirement, and of course we know many clients who spend well in excess of that over the years.

Social Security 

For those that qualify for Social Security income, early benefits can begin at age 62 but will be considerably reduced. For those born between 1943-1959, full retirement age is 66 + several months, depending on your specific birth year. For those born after 1960, the full retirement age is a flat 67 years old. If distributions are delayed until age 70, the monthly benefit will increase significantly. In 2021, the maximum monthly Social Security benefit for a retiree at 62 years old is $2,324/month, although at full retirement age of 67 that maximum becomes $3,113/month, and if deferred until 70 years old, $3,895/month.  Often overlooked, Social Security income in most cases is taxable, at least at the federal level.  Establishing a tax withholding prior to receiving your monthly benefits can help avoid unexpected tax liabilities during filing season. 

Insurance Policies

Insurance policies that have been retained over the years should receive a full review at retirement. These policies may include life and long-term-care insurance, homeowners, automobile, and umbrella insurance.  Knowing your specific coverages along with what to expect as you age, and importantly, what insurance you may no longer need, can give you additional peace of mind and security in retirement.

Retirement Account Review

Upon retirement, consolidation of outstanding retirement accounts can offer simplicity and makes for easier accounting when required minimum distributions commence. Furthermore, holistic investment planning is more difficult when accounts are held in multiple locations and can often create unintentional overweight/underweights in investment strategies. Before simply initiating a roll over, however, you should review each individual plan to ensure that no residual benefit is lost due to consolidation.

Annuity contracts should also be reviewed, and cash flow likely started early in your retirement. Collecting your periodic benefit for the remainder of your and/or your spouse’s life is a great way to meet current cash flow needs while utilizing the underlying lifetime guarantees built into most annuity contracts.  Annuity contracts are incredibly complex and should be reviewed thoroughly with your investment professional before any significant decisions are made.


Evaluate all pension options prior to retirement as elections must be made before the benefits begin. Married or joint households that participate in Cal PERS or Cal STERs programs should ensure that a designated beneficiary is specified.  We highly recommend that you review beneficiary designations as early as possible as it can drastically affect your pension estimates. 

As always, the planning process is not meant to be done in a silo.  We are familiar with and have reviewed a multitude of policies, contracts, and investment structures. The topics covered here are by no means a comprehensive list, but instead serve as a thoughtful checklist as you head into retirement. Please reach out to discuss any of the topics in greater depth.