A retirement plan is built using what you know today. As your life and circumstances change, your plan may need to change too.
There’s something I’ve noticed over the years when talking with people about retirement planning.
Sometimes they’ll tell me, “Oh, we already have a retirement plan.”
And that’s great.
But one of the questions I like to ask is: “When was the last time you updated it?”
Because there’s a pretty big difference between having a retirement plan and having one that still reflects your life today.
The original plan may have been perfectly good. But life kept going after that plan was created. And a lot can change…
Think about what can happen in just one year: The markets may have gone up or down. You may have spent more—or less—than expected. Your account values changed. Maybe tax laws changed. Perhaps you bought a new car, helped one of your kids, finally took that big vacation you’ve been talking about, or decided you want to retire a year earlier.
Those aren’t just changes in your life. They’re new information for the plan.
That’s why, when clients decide to work with us, we review their retirement plan every year. It’s not simply about checking investment performance or looking at account balances. It’s an opportunity to ask:
“Based on where we are today, does anything need to change?”
Maybe we adjust spending or where retirement income is coming from. Maybe there’s a tax-planning opportunity. Or maybe we uncover a potential pitfall before it becomes a problem.
Sometimes One Decision Affects Something Else
I had a client who needed a significant amount of money and was considering simply taking a large distribution from an IRA. The money was there, so at first glance it seemed pretty straightforward.
But once we looked at the bigger picture, we realized that taking that much taxable income from the IRA in one year could potentially increase their Medicare premiums down the road because of IRMAA.
Suddenly, a simple withdrawal decision wasn’t quite so simple.
So, instead of only asking: “Do we have the money for that?” We could step back and ask, “What else could this decision affect?”
Sometimes we’re looking for opportunities. Other times, we’re looking for potential consequences we may not have considered. And sometimes nothing needs to change at all.
Your Plan Should Change as Life Changes
A retirement plan might look out 20 or 30 years. But none of us knows exactly what’s going to happen during those years.
That’s why I don’t believe retirement planning should be something you do once, put on a shelf, and pull back out several years later.
We build the plan based on what we know today. And as life happens, we come back, update what changed, and ask:
“Knowing what we know now, does anything need to change going forward?”
To me, that’s what ongoing retirement planning is really about.
So instead of simply asking:
“Do I have a retirement plan?”
Maybe the better question is:
“Does the retirement plan I have today still reflect the life I’m actually living today?”
Because your retirement plan shouldn’t just reflect where you thought you’d be. It should reflect where you actually are.
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