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SPECIAL PROMOTIONAL: Financial Plans for Life

The importance of planning finance in retirement

The primary concern of managing retirement savings is always to make sure those savings will last for as long as they’re needed. And an important aspect of putting financial assets to their best use
is to define what they can do going forward. Two area financial advisers offer expert advice.

RBC Wealth Management

“I think the first question to consider is ‘What do you want to do in retirement?’” says Lauri Droster, branch manager at RBC Wealth Management. “I’ve seen people who became unhappy after retiring because their identity was tied up in their work, and when they retired they were lost.”

In other words, plans are important not only for financial reasons but for how you’ll spend your time. Consider hobbies, consulting, volunteering, recreation, part-time employment and more.

“Think about what’s important to you,” says Droster. “Do you want to leave money to your children? One client said to me, ‘Heavens no, my kids have way more money than I do!’ Some people want to spend their last dime on their last day, but to many clients it’s important to pass money on to their heirs or to charities.”

Then, too, consider other retirement goals. Do you want to buy a boat? Travel the world or start a business? Do you want to move closer to kids and grandkids? Look at each goal, say financial advisers, and factor the savings needed to reach it.

Financial planning in retirement is all about how you’ll replace your current income when you don’t have a job and a paycheck, Droster says. When calculating what they need in retirement, retirees often overlook the costs of health care and long-term care, and what inflation will do to their money over a 20- or 30-year retirement.

As a person gets older and closer to retirement, Droster says they should be shifting a portfolio to more conservative investments. “You don’t want to be 100 percent in stocks the year before you retire,” she explains. “I have seen retired people need to return to work because of a big correction in the stock market.”

In retirement it’s more important to protect on the downside than to risk the portfolio in hopes of making more money. If a portfolio has some bonds, certain types of annuities, or other investments with less volatility, it may hold up better if the stock market goes down. The key is to set a sustainable withdrawal rate and monitor it each year. Lower initial withdrawal rates give the portfolio a higher chance of success over a long retirement period. Retirees may need to be flexible and adjust their income over time, according to their needs, inflation and market performance. 


It’s extremely important for everyone to have a health care and a financial power of attorney, says Droster. If someone becomes disabled or is no longer able to manage his or her own health care or financial decisions, the POA can take over and avoid the lengthy process of establishing guardianship. “It’s certainly a good idea to talk to your POA, usually your spouse or children, about your wishes,” Droster says. “Also show them where to find documents, statements, insurance policies, et cetera, and whom to contact if they need to take over.” 

Summit Financial Advisors

“I encourage people to envision their retirement,” says Mark Gernetzke of Summit Financial Advisors.

After retiring, people may want to travel more, spend winters in a warmer place, or stay home and pursue hobbies or other interests. The key is to have a plan that includes preparing for the unexpected.

Summit Financial Advisors offers comprehensive financial and insurance services at Summit Credit Union branches across southeastern Wisconsin. Gernetzke, whose offices are in Madison, Sun Prairie and Beaver Dam, notes that an important element of a retirement plan is a budget.

“In many ways it’s not much different from the budgeting you’ve done for the previous 20 years,” he says. “Every decision we make is based on what we get each month: a paycheck. In retirement, you’re just getting your paycheck in a different way.”

One difference is that new pursuits or lifestyle changes might lead to additional expenses, even as other expenses are eliminated. “People should ask themselves, ‘What is the minimum amount I need coming in the door each month to maintain my lifestyle? And what is the ideal amount?’ Look at all future sources of income,” Gernetzke says. “Ideally, most of us should seek to have a ‘three-legged stool’ of retirement income consisting of federal government pension (usually Social Security), an employer-sponsored retirement plan, and individual retirement savings, including 401(k)s, IRAs and other savings and investments. We look at whether those three legs are sufficient and, if not, we consider how to close the gap.”

In addition to an income stream that covers budgeted expenses, it’s important to have a “rainy day fund” or financial cushion against the curve balls that life will inevitably throw our way.

For example, should we eliminate debt prior to retirement? That depends, Gernetzke says.

“It used to be that all debt in retirement was viewed as undesirable. Ideally, I like to see people go into retirement without debt, but that goal might come at a cost,” he explains. Paying off a mortgage, for example, might be less advantageous if that money could be profitably invested elsewhere. Or reducing debt might prevent a person from maximizing contributions to a retirement plan. “In that case,” he says, “rather than focusing on paying down debt, we might meet with a loan officer and look at making that debt more efficient.”

Significant credit card debt on the other hand, is an indication that an individual lacks an emergency fund, and that they need to step up their savings: “At any stage in life, I tell people, ‘Pay yourself first. Treat savings like a bill, because we can put together a retirement plan, but it won’t work if you don’t have assets.”

Ultimately, then, financial planning for seniors is part of lifelong financial planning, because it’s about saving consistently from an early age. “At 20, 40, or 55, life will always give us reasons not to save money and not to keep moving forward,” Gernetzke says, “The challenge is to persevere.” •

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