August 2016
Volume 7, Issue 8

Be Prepared to Go the Distance

Step-by-step planning for retirement

By Ellen Rogin, CPA, CFP®

Ellen Rogin, CPA and CFP®, is an Abundance Activist® and author of the New York Times best seller Picture Your Prosperity: Smart Money Moves to Turn Your Vision into Reality. She presents to corporate audiences and associations. Learn more at

While training to run in the Chicago Marathon (I’ve done this six times over about 30 years), it occurred to me that preparing to run 26.2 miles is much like preparing for retirement. Preparation, focus, discipline, and a plan are all important. You can do it on your own or with a team of other runners for support. There are also fundamental training steps, which are important for both marathon runners and people wanting to retire in financial comfort.

Step 1 Have Clear Goals

Some marathon runners set a goal of crossing the finish line; others try to beat their last best time or qualify for the Boston Marathon. Clarity on what is really desired from the experience will help make it a reality and help you reach that goal. Planning for retirement is no different. The clearer you are about what you truly desire in your retirement, the more likely you are to reach your goal. For many people, the initial goal is: “I want to retire at 65.” This is akin to me saying I want to cross the finish line. What do you really want retirement to look and feel like? Where do you see yourself living? Will you be totally retired, or do you see part-time or volunteer work in your future? What type of lifestyle do you want to have and how does this compare to your current standard of living? The more clearly you design your future retirement picture, the more likely you’ll be able to reach your goals. Don’t worry; you can change the picture, but you must start with one.

Step 2 Have a Plan to Follow

Getting ready for a long race requires developing a plan for training. Similarly, knowing what it takes to achieve a secure retirement significantly increases the likelihood of reaching your goal. You’ll need to know the current value of your assets, projected expenses in retirement, and how much you can expect from any pension plans and social security. How much you’ll need to save for your future financial independence will depend on other factors, such as when you want to retire and how much you’ll need to live on when you stop working full-time. Armed with this information you can work with an advisor or use an online retirement calculator to help you determine if you are on track or need to make adjustments.

Step 3 Put Your Plan into Action

Once you know what you need to save to reach your retirement goal, consider setting up automatic investments into your retirement funds. Most everyone does better with saving when it is set up to happen automatically out of your paycheck or savings account. Here are some guidelines on where to allocate your retirement savings, in order of priority:

1. If you have set up a 401(k) or similar employer-sponsored retirement plan for your business, your first retirement planning move should be to contribute the maximum amount into this plan. Why? The money you put in reduces your taxable income for the year, and any growth of the money will be tax-deferred until you take the money out in retirement. (If your company offers a Roth 401(k), there are no tax savings now, but when you take the money out during retirement, any investment growth will be tax-free.)

2. If you don’t offer a retirement plan through your business, or if you do and want to sock away even more money, the next type of account to consider is a an IRA (Individual Retirement Account). Think of an IRA as a container that can hold almost any type of investment and allow it to grow, tax-deferred, until you take the money out during retirement.

As a business owner, beware of the trap of assuming the eventual sale of your business will totally fund your retirement. Most business owners will need to save outside of their businesses to provide sufficient funds for retirement.

Step 4 Give Yourself Time and Be Consistent

For most runners it would be potentially dangerous to wait until the last minute to prepare for a marathon. Beginning to train far ahead of the race and consistently running according to a training schedule will lead to a much higher likelihood of success. This is true for retirement savings also. It is much more difficult to retire securely if you wait until a few years before retirement to get serious about planning. Instead, if you begin thinking about your financial future early and start saving on a regular basis, you are more likely to meet your goals. But … if you are starting late in the game, don’t be discouraged! Saving what you can and moving toward your goal will be better than giving up altogether.

Step 5 Protect Yourself from Injury

Obviously an injury can seriously hinder the training and success of a runner. Similarly, a financial injury such as loss of income through death or disability can hurt your financial future. Fortunately, there are a variety of ways to limit the likelihood of this happening. Disability insurance can be very important if you are relying on your income for your future financial security. Life insurance can protect your family in the event of an economic loss relating to a death. Long-term care insurance will help protect your finances in the event of the need for at-home or nursing home care for a family member. Your investments also need protection from financial injury. Diversification can help to reduce the risk of concentrating too much of your money in one type of investment.

Step 6 Visualize Success

Many of the world’s best athletes picture in detail their competitions beforehand to improve performance. The same can be done with your financial goals. Spend time picturing your retirement. Be very specific in focusing on what it will be like for you when you retire. You can visualize the steps along the way, including: saving on a regular basis, the growth of your investments, and feeling secure about your financial future. Add as much detail as you can to this picture. What will you be doing after you stop working? Who will be there with you? What do your surroundings look like? To turbo-charge your vision, add in how you will feel as this is happening in your life. Maybe it’s a feeling of peace, confidence, excitement, or joy. Actually feel these emotions as you are picturing your future life. Mental images of our finances play a crucial part in creating prosperous lives for ourselves.

Whether you’ve been training for years for your retirement or you are a newbie, moving toward your goals, taking the right actions, and following a plan will help you to cross the finish line feeling great and it will inspire those around you to do the same.

Your investments also need protection from financial injury. Diversification can help.

Beware of the trap of assuming the eventual sale of your business will totally fund your retirement.

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