Advance planning is key to achieving retirement outcomes

If you checked your savings and account balances today, what would it reveal about your preparedness for retirement? Would you feel confident about where you stand or the exact opposite?

If you’re feeling generally mixed about the progress you’re making against your retirement goals, you’re not alone. According to Thrivent’s 2022 Retirement Readiness Survey, only 40% of Americans say they have ‘very much’ or ‘somewhat’ been able to achieve the retirement planning goals they’ve set for themselves. Of those nearing retirement, a surprisingly small number — only 5% — say they have everything planned out and are 100% ready.

What’s behind this sentiment? The challenging financial environment we’ve experienced in 2022, marked by persistent inflation, has made it harder for people to build and preserve their level of savings. In fact, 66% of adults surveyed said they expect to be impacted by inflation upon reaching retirement, and 67% who are currently retired are concerned about the impact it is having. Other financial unknowns, like future healthcare expenses or possible cutbacks to federal benefit programs, like Social

Security, may add even more complexity to retirement planning.

Trying to make sense of all of these variables can be overwhelming and leave you feeling like a successful retirement is out of reach. But advance planning can help you hedge against some of these risks and bring you closer to reaching your goals.

At Thrivent, we believe in-depth retirement planning is best done in consultation with a financial advisor who is closest to your unique goals and dreams, but there are several steps you can take independently to start identifying your retirement outcomes. Here is some advice that may be helpful at any stage of the planning process:

1: Establish a retirement timeline with your desired outcomes in mind.

Before you can develop a retirement strategy, you should think about your timeline, which ultimately depends on the outcomes you’re hoping to achieve. It’s common to prioritize the math and just think about the total amount that needs to be saved in order to retire comfortably. But it’s equally important to think about how that money will be used and spent over the years.

As you start to think about your timeline, here are a few helpful questions to serve as a guide.

• How many years are you (and your spouse or significant other) planning for? Be sure to factor in personal health considerations and circumstances that may affect this.

• Where do you want to live? This could depend on a variety of factors, including wanting to live near family, type of home and cost-of-living considerations, and accessibility to health and caregiving facilities.

• What passions will you pursue? Ending a career opens up new possibilities to think about your role in community and how you want to use your time and talents.

• How will you distribute your assets over time? You’ve spent your working years building up your nest egg, but if you don’t have a distribution plan, you’ll be sitting on what you’ve worked so hard to accumulate.

Once you’ve done this important legwork, you’ll be in a great position to meet with a financial advisor who can help you review your assets and figure out how you can use money as a tool to achieve your desired retirement outcomes.

2: Gather an inventory of what you have — and identify potential gaps.

The next step in building a retirement strategy involves taking an inventory of what you currently have, which will also expose any gaps you have yet to fill. At Thrivent, we believe this is best done in partnership with a financial advisor who can help ensure you are getting the most comprehensive picture of your finances. During this phase, you should consider reviewing all aspects of your finances, including investments, employer or pension benefits and guaranteed income sources.

It’s never too early to start planning for healthcare, either. According to Thrivent’s survey, only 15% of those nearing retirement said they have spent a great deal of time focusing on this topic and feel confident in their level of understanding. Eleven percent haven’t spent any time at all thinking about healthcare expenses or potential implications for retirement. Along with your spouse or partner, try to prioritize getting regular check-ups so you can start forecasting what future healthcare expenses may look like.

3: Consider different scenarios to stress test your retirement strategy.

Because there are many variables and assumptions involved in planning for the future, you should consider the different scenarios that may impact your strategies and distribution plans, including

• Taxes

• Inflation

• Health events

• Longevity

• Possible market downturns

• Other roadblocks, including debt, spending shocks or loss of a job.

A financial advisor can help you forecast how these factors may impact your strategies and work with you to build in some flexibility into your plans, including exploring financial solutions that may help buffer against possible losses.

4: Execute your strategy. If you’re approaching retirement or are already retired, your focus will turn from accumulation to distribution, as you figure out how to manage withdrawals from your accounts to meet everyday needs. Now being on a fixed income, you’ll need to consider how your money will fit into your budget and expenses, while keeping enough room to pursue other passions.

5: Review your strategy regularly to ensure you’re on track.

Just like a broader financial strategy, thinking about retirement is never “one and done.”

Your retirement outcomes may change as you advance in life and in your career, and financial circumstances may ebb and flow, too. Aim to review your retirement strategy on a regular basis with your financial advisor so you can determine if you’re still on track or if you need to make modifications.

Thrivent’s survey found that while 57% of retirees and 43% of non-retirees feel confident about retirement, many from each group also report feeling anxious (19% and 41% respectively) and overwhelmed (14% and 34% respectively) about what is to come. Seeking support from a financial advisor and taking a holistic approach to planning that involves in-depth risk and scenario planning, can help people at any stage feel better positioned to achieve their desired outcomes.

Interviews for Thrivent’s 2022 Retirement Readiness Survey were conducted online in June 2022 among a national sample of 1,500 adults to measure their sentiments, financial planning, knowledge, and issues regarding retirement with data broken into Saving, Nearing, and Retired. Results from the full survey have a margin of error of plus or minus 3 percentage points.