Retirement Self-Assessment

A self-assessment is defined as the evaluation of oneself, specifically as it relates to one’s performance relative to an objective standard. Many of us perform self-assessments as part of our regular performance reviews at work. While it may be fair to say that few enjoy the process, there’s also a part of us that really wants to know how we measure up against others.

Here are some “yardsticks” for measuring financial fitness based on various stages of life. Pat yourself on the back for the items you can check off and challenge yourself on those areas where you can use some improvement.



  • Begin saving at least 15% of your paycheck every pay period (starting with the first paycheck) and don’t spend more than 50% of your gross income on the “essentials” (e.g., housing, utilities, transportation and food). Before you accepted your first job, you had no money. Any amount of income over zero should make you feel rich, right? If you establish good habits in the beginning, your future self will be forever grateful.
  • Take full advantage of the employer match in your 401k or 403b plan (it’s free money). If your employer offers a Roth 401k, elect to have 100% of your personal contributions go into the Roth. The employer match will automatically go into the Traditional 401k.
  • Open a brokerage account and set up automatic monthly contributions from your checking to this account. Even if you can only manage to save $100 per month, it’s worth it (because it establishes a good habit). Every time you get a raise at work, make sure you give your brokerage account a raise as well. Do this over the course of a lifetime and you will be amazed at the result.
  • If you have student loans, determine which loan you should aggressively attack first. Generally, that will be the loan with the highest interest rate.
  • Set goals and then create a plan for saving, spending, and giving (and track your progress over time).
  • Don’t buy an expensive car. Be careful with your credit card (that’s right—you only need one) and pay the balance off every month. Keep fixed costs to a minimum.
  • Don’t buy a house until you can afford to put 20% down. Renting is not a bad word. Find roommates to help keep housing costs reasonable.
  • Seek out someone older than you who is financially savvy and take advantage of their knowledge. Don’t try and figure this all out by yourself.



  • If you are 30 and began working immediately after college, you should have at least the value of your salary in savings. This is not “rock star” saving, but it is a reasonable goal to shoot for to help keep you on track for a comfortable retirement at age 65.
  • If you have children, open a 529 college savings account. Set it up to automatically pull a fixed amount of money from your checking account each month. The less you have to do to save, the faster your wealth will grow.
  • You should also make sure that you have the proper amount of life insurance to take care of those who are dependent upon you. Low-cost term insurance is usually the way to go. If you have children, you should also consult with an estate planning attorney to make sure that their needs are met if you are no longer able to take care of them.
  • By this time, student loans should be paid off and you should be maxing out (or close to maxing out) your 401k. Another good place to save money, if eligible, is a Roth IRA. If not eligible to contribute to a Roth IRA, contribute to regular brokerage account instead.
  • Make sure your money is working hard for you. If investments are in high-cost funds or if your asset allocation is too conservative, you could be giving up at least 1%-2% in return every year. Over a lifetime, that could be an opportunity cost of hundreds of thousands of dollars.
  • Beware of “creep”. Most people allow their lifestyle to grow at the same rate as compensation. If you do that, you’ll never retire early. It’s ok to enjoy your success, but just make sure that for every percentage increase in compensation, you are also increasing your monthly savings.



  • Now is the time (if not earlier) to take a very serious look at retirement to make sure you are on track. If you wait much longer, it will be too late. When it comes to investing, one of your greatest allies is time. If you are not working with an advisor, find one and create a financial plan for your future. Financial magazines are good at giving rules of thumb, but there is no substitute for an experienced advisor who will ask the right questions and incorporate your individual goals into a retirement plan that has a high chance of success.
  • Revisit your 529 college savings accounts and make sure that contributions are still on track to meet your educational goals.
  • If you took out a 30-year mortgage in your 30s, consider refinancing to a 15-year loan. If you already have a low interest rate, you can just make extra principal payments instead. One of your primary goals prior to retirement should be to eliminate your mortgage. The key to feeling wealthy in retirement is to make sure that most of your expenses are discretionary (i.e., no mortgage, no car loan, etc,).
  • With respect to retirement, the early 40s are a make or break time for most people. If you don’t have good financial habits in place by now, you are probably never going to change. This is also when life can start to feel a little overwhelming due to all the demands on your time—career, family, school, kids’ extra-curricular activities—it’s easy for money to just slip through the cracks if you’re not careful. If this sounds like you, and you would like a third party to look at where you are and give it to you straight, give us a call. If you’re committed to success and willing to change, we can help you alter your future.



  • If you plan to retire at 65 and your income is greater than $100,000, your investable net worth (not including home equity) should be greater than $1,000,000; greater than $2,000,000 if income is greater than $200,000. These benchmarks don’t guarantee a comfortable retirement (it all comes down to spending), but accumulating 10x salary in savings is a reasonable target to shoot for by your early 50s. If you’re 50+ and don’t have this kind of savings, you may have to save significantly more than 15% of salary between now and retirement to maintain your current standard of living after you stop working.
  • The good news is that the government allows you to begin saving an extra $6,000 in your 401k once you turn 50 ($24,500 vs. $18,500). You can also save an extra $1,000 in your Roth IRA, if eligible ($6,500 vs. $5,500).
  • Mid- to late-50s is the time to begin looking at your options for long-term care insurance. Premium costs have become exorbitant, but some employers offer decent options, which often include portability. Use a fee-only advisor to sort through your options and help with the analysis.




  • You made it this far—congratulations! Staying vertical and reasonably sane is half the battle. Now is the time to run the numbers again and decide when it makes sense to retire.  And, believe it or not, it’s often a difficult decision. You’re probably making more money than ever before and life is pretty comfortable. It’s not easy to give that up and make the decision to rely completely on savings (and social security) for the next 25+ years. This is where a trusted advisor can provide much-needed advice, guidance and support—having an independent second opinion at this stage of life can prove to be invaluable.
  • Unless you are in poor health, don’t even think about taking social security at 62. The benefit of waiting is too great. That’s why it is so important to build up a healthy balance in your regular brokerage account—to bridge the gap between retirement and when you begin taking social security. You can see the difference in social security benefit payments if you create an account at The social security “full retirement age” for most of us is 66 or 67. If there are other savings to live on, and health is good, it makes sense for most people to wait until age 70 to begin claiming their benefit. Bottom-line: Talk to your advisor and create a social security strategy.
  • It is also preferable to allow your tax-deferred accounts (401k and Traditional IRA) to grow untouched until age 70 (the age when the government requires you to begin withdrawing money). The reason being is that a good percentage of your IRA actually belongs to the IRS. That’s right, every dollar you take from a Traditional IRA is taxed as ordinary income. The longer you leave it in there, the longer you are making money on the government’s money.
  • About five years before you retire, you want to make sure that you have at least five years’ worth of expenses invested in short-term, high-quality bonds in your brokerage account. This will protect you in the event the country is in recession at the time you plan to retire. In the past, recessions have rarely lasted longer than three years. You want to make sure that you don’t have to sell any of your stocks when prices are depressed. Even if the country is in a deep recession, your short-term bonds should hold their value relatively well.
  • Last but not least, make sure you have a well-thought out plan about what you will do in retirement. Almost 60% of all retirees do not do a good job of planning or budgeting for what retirement will look like. Be prepared!


Some other things to think about in retirement

  • Make sure your estate plan is up-to-date. It’s wise to review your documents about every five years (or sooner if there is a significant change in tax law). Make sure that you communicate your wishes to your family and involve them, as appropriate, in your financial affairs.
  • Be wary of scam artists—you may think you could never be fooled, but just as our bodies age with time so do our mental capacities. Another good reason to communicate frequently with those closest to you.
  • Be patient as you shift from working (and saving) to not working (and withdrawing). This process is more difficult for some than others, but we find that it takes most people about 6-12 months before they begin to feel comfortable with full retirement. The shift can be made easier if you are fortunate enough to be able to transition from full-time to part-time to full retirement over the course of several years.
  • Enjoy (you’ve earned it)! Making sacrifices and delaying gratification to save money during the working years isn’t most people’s idea of fun, but we have never heard anyone say that they wished they had saved less money. The freedom of a secure and comfortable retirement is priceless.