A crucial part of aging in place is understanding and honestly evaluating you or your loved one’s financial health. Much like a company that reviews its profit and loss statements, you should conduct a comprehensive review of all income and assets. Attaining economic security for seniors starts with putting together a solid plan. Start by thinking about your health and longevity, as well as, the financial needs of your future self.

  • What is your life expectancy? Use the Social Security Administration’s life expectancy calculator to quickly assess how long you or your loved one might expect to live. Although the calculator doesn’t take into account factors such as current health, lifestyle, and family history, it’ll give you an idea of the annual income needed to avoid running out of money.
  • Future Expenses. The cost of aging can vary widely according to needs so plan for multiple outcomes, such as living well into retirement or requiring in-home care, assisted living, skilled nursing, or memory care.
    • Start by listing all current expenses to develop a reasonable estimate of what will be needed in the future. Consider needs such as mortgage, utilities, and food. Also, include things you want to do such as travel and entertainment. Don’t forget major expenses like taxes and health care.  
    • Think about your later years and how your needs will change. Factoring in anticipated care costs is crucial for staying solvent. For example, at some point it may make sense to transition into an assisted living facility. 
    • Genworth’s calculator can help give you a better understanding of the costs associated with care services. 
    • Tax Considerations: Don’t assume your tax bill will decrease. 

Today a 65-year-old can expect to live another 19 to 21.5 years, on average, according to the Social Security Administration. What’s more, the government agency says a third of 65-year-olds will hit age 90, and 1 in 7 will live beyond age 95.

How do I create a financial plan for retirement?

Photo of elderly couple looking at computer with younger woman with paperwork for estate planning.

After you have put pen to paper about your anticipated financial needs in retirement, your next step is to do start gathering documents and making some important planning decisions.  

Given the complexity of retirement planning you may want to consider hiring a financial planner. Financial planners and advisors are valuable sources of information as they can help you identify potential financial resources and tax deductions as well as analyze your investment portfolio with long term care needs.  As you’re interviewing potential financial partners, check their professional credentials, work experience, educational background, membership in professional associations, and areas of specialty. 

It’s also worth keeping in mind, as you plan, a common rule of thumb is that total retirement income—Social Security plus pensions, asset income, and other sources—should replace about 70% of preretirement earnings. Financial advisors’ recommendations of a 70% replacement rate are generally measured against final earnings. However, there is no single authoritative source for 70% as the appropriate replacement rate, and indeed recommendations can be higher or lower. Rather, 70% appears to be a rough consensus among financial planners and others, according to the Social Security Administration.

Retirement Financial Planning Checklist

What documents you should gather as you prepare to map out your financial longevity.

  • Bank and brokerage account information
  • Deeds, mortgage papers or ownership statements
  • Insurance policies
  • Medical and durable powers of attorney
  • Monthly or outstanding bills
  • Pension and other retirement benefit summaries (including VA benefits, if applicable)
  • Rental income paperwork
  • Social Security payment information
  • Stock and bond certificates
  • Wills
  • List of important documents (passwords, bank accounts, etc.)