Planning for retirement should be approached as an ongoing rather than a one-time event process. Ideally, you should start early in your working career: the sooner you start saving for retirement, the more time your investments have to grow by compounding. But, it is never too late to start planning. Whether you are age 25 or age 60, it will be to your benefit to do some basic retirement planning. The following notes only scratch the surface of what is involved in a comprehensive retirement plan. Use these notes, resources, and links to get started on this important matter.

Plan Checklist

Also Consider…

Financial planning has to do with quantifying in terms of specific times and specific dollar amounts where you are, where you want to go, and how you propose getting to where you want to go. For retirement planning, here are the basic steps:

Step A — Present circumstances: Evaluate and document your present circumstances
Step B — Goals and assumptions: Set income goals during retirement and assumptions about inflation and investment returns
Step C — Devise action plan: Determine what actions are required to go from your existing circumstances in documented step A to the desired goals specified in step B.
Step D — Implement action plan: Act, save, invest!
Step E — Monitor and revise: Periodically review progress and return to step B

Step A

Present Circumstances may be the hardest for most people. To get a complete picture of your present circumstances, you have to gather your personal financial information and organize as follows:

  1. Personal Budget
  2. Personal Net Worth Statement
    Click to download the forms shown above to help organize your information. Or, you may want to try Quicken Financial Planner or Microsoft Money. These products are available from Quicken and Microsoft (see external links section on this page) respectively, and offer a fairly complete system to organize your information.
  3. Estimate retirement income from Social Security and Pension plan(s)

You will want to collect information on your anticipated retirement income from Social Security, the Pension Plan, and any other pension plans which may apply. Social Security is now sending out annual estimates of your future benefits. You can also click here to get a “quickie” estimateof your Social Security benefit. To get an idea of your benefits under this Pension Plan, contact the Trust Customer Service Office with a request for an estimate of the benefit you have already earned.

Step B

Goals and Assumptions presents another difficulty. To set goals realistically, you need to set two specific goals and make three assumptions about the future.


  1. State the specific month and year when you want to retire,
  2. State in current after tax dollars what your expenses are likely to be (don’t forget travel, hobbies, kids, grandkids, medical expenses, and long-term care costs).

A rule of thumb used to be that you need 60%-80% of your current income to maintain the same lifestyle in retirement. Many planners are now suggesting a higher percentage, due to a variety of factors: retirees are more active (spend more money) than in previous generations, medical inflation rates continue to outpace general inflation rates, and long term care needs are not anticipated to be met by family or the government.

And look in your crystal ball to foresee:


  1. how long you (and your spouse) will live in retirement,
  2. how much your investments will earn,
  3. what inflation will be.

Be careful, unrealistic assumptions will usually yield wacky results. Most planners use conservative assumptions based on long-term historical rates. For example, they might use 4% as an assumption for the annual inflation rate, 10% as the investment return for stocks, and 6% investment returns for bonds. These assumptions work O.K. for long-range planning, but they are worthless for time horizons of under 5 years. The longer the period which is being estimated, the more accurate these assumptions can be expected to turn out. If your estimates produce unrealistic results, go back and review your assumptions.

Step C

Make a Plan requires a lot of number crunching. In this step you take all the numbers showing where you are, calculate all the savings/investment buildup until retirement, and calculate all the spending during retirement for the length of your expected lifespan.

It is possible to work out rough estimates with pencil and paper. If you are so inclined, you might create an Excel spreadsheet. Most people find it is easier to use one of the software packages mentioned above. Or they use an online retirement planner such as is available form Schwab, Vanguard, Fidelity, (see external links section on this page) and many other financial websites. But beware, the planning software on these sites will often produce widely different results. This is because they ask you to input your information and assumptions in differing ways; each planning software also has its own assumptions which are not always apparent to the user. You may also want to get the help of a financial planning professional, such as a Certified Financial Planner (CFP). Fitting together the probable outcomes based on all this input is an area to which you will want to dedicate some considerable attention.

A simplified “ballpark” estimator for this calculation is provided by the American Savings Education Council. Click here to perform the calculation online, or here to download a printable form in PDF format.

Your calculations should result in a number — how much to save each month, and an asset allocation — what investments to put your savings into. That is your action plan.

Step D

Saving and Investing is easy!

  • Start (or continue) saving.
  • Reallocate your existing investments and make new investments based on the asset allocation you have determined.

Step E

Monitor and Revise

  • At least annually, review your progress towards your goals.
  • Reevaluate your current circumstances as applicable.
  • See how well the chosen assumptions fit real life results.
  • Consider rebalancing your investments to maintain your asset allocation.
  • Make changes to your assumptions and plans as necessary.


As the world changes, so does the standard thinking regarding retirement planning. From Money and all the other financial magazines, the Wall Street Journal, hundreds of financial websites, and self-help financial books, there are vast resources available to you. As the economy changes, your Pension Plan changes, Social Security and Medicare rules change, stay informed. This will allow you to take your best shot at arranging for a comfortable retirement.

You can check out this publication, a Financial Warmup, offered by the Department of Labor and the CFP Board as a starting point for your research. Or, start with any of the links shown on the external links section on this page.

  • Social Security
    The Social Security homepage offers education on how your retirement benefits are figured, how social security may change in the future, how it’s financed, and other basic facts and figures. Check this site on how to apply for your benefits, how to appeal these benefits, and everything else regarding social security.
  • Vanguard
    Vanguard, a mutual fund investment company, offers an extensive Vanguard Online Planner. It is free and does not require registration to run the planner. If you register (free) you can also save your information online and then come back later to revise it.
  • Nolo Retirement
    Information on retirement plans, benefits, estate planning, and long-term healthcare. There is also a section on the personal concerns of retirement.
  • Denali Alaskan Federal Credit Union
    Denali Alaskan Federal Credit Union offers Investment Services Department as a professional connection to retirement planning, investment planning, tax planning and more.
  • Frontline – Can You Afford To Retire?
    The baby boomer generation is headed for a shock as it hits retirement: many of them will be long on life expectancy but short on savings. The two main strategies for funding retirement — lifetime pensions and 401(k)-style savings plans — are in serious trouble. In “Can You Afford to Retire?” FRONTLINE correspondent Hedrick Smith (“Is Wal-Mart Good for America?”) investigates this looming financial crisis and the outlook for middle-class Americans.
Life Events

Wherever life takes you, know your benefit impact.