Formulate a Financial Plan

Know Your Net Worth

Manage & Minimize Debt

Accumulate Assets

Budget to Live Within Your Means

Understand Investing Basics

Plan for Retirement

Insure People & Property

Deal with Financial Advisors

Review Your Employment Contract

Make Plans for Your Estate

Make Good Decisions


In previous sections we discussed various retirement accounts and their tax features. Setting up retirement accounts is a necessary but not sufficient condition for retirement planning. Proper preparation includes increasing contributions to accounts over time, monitoring progress toward Golden Goose Principal (GGP), drafting estate planning documents, budgeting, and managing debt.

Often overlooked are non-financial considerations such as deciding where to live and how to keep busy and vibrant over several decades as a retiree. As noted earlier, our focus in this book is on the financial considerations. Your employer may offer information or workshops on the non-financial elements of retirement planning.


Get an Early Start

We’ve already established that compounding works in our favor over long periods of time, allowing even small investments to grow significantly.

Begin saving and investing for retirement as soon as possible. Modest contributions are a lot better than nothing, and they help you develop good saving habits.


Formulate a Retirement Budget Forecast

Maintain a current budget reflecting all income and expenses to ensure you live within your means and generate the savings needed to reach GGP. In addition, develop a budget forecast for your retirement years.

In retirement your budget will look different compared to your working years. Your income will likely be lower, and your medical expenses will likely be higher. Many of your outlays will be lower or completely gone. In particular, commuting costs, formal work clothes, and business meals will be things of the past. You will likely have finished paying off your mortgage and kids’ college education, and assuming you’ve compiled a sufficient nest-egg, you will no longer pay for disability and life insurance. You will also no longer pay Social Security and Medicare taxes, unless you still have some earned income.

As an empty-nester you may downsize your house or relocate closer to desired support services such as medical facilities or family, and leisure activities such as a golf course or swimming pool.

Giving some advance thought to these differences gets you thinking about the relevant issues and provides an opportunity for discussion with your spouse, partner, and or children.

Quantifying healthcare costs in retirement is challenging but there are some metrics one can use. For example, Vanguard provides ranges of estimates for Medicare Parts B and D costs, as well as total annual healthcare costs on its website.[1]


Steadily Pay Down Debt

As you enter middle age you are in your prime earning years. This is the time to tackle any outstanding debts and pay them off. Debt is a drag on your household wealth development, especially if interest rates are high. In the current low-interest rate environment I’d consider any debt with rates over 5% to be high. Aggressively pay down this debt.


Line-up Alternative Retirement Income Sources

In addition to traditional investment income such as interest on bonds and dividends and capital gains on stocks, you may receive income from other sources in retirement, including:

  1. Real estate rental income
  2. Book royalties
  3. Teaching income
  4. Consulting income
  5. Expert witness income

The benefits of having such income sources include the income itself, but also extend to intellectual stimulation and social connection from remaining involved in medicine and or business.


Draft and Update Estate Planning Documents

Ensure proper estate planning documents are in place. I address basic documents such as Wills, Trusts, and Powers of Attorney in the estate planning chapter of this book.


Related Links:

Vanguard Retirement Health Care Costs Calculator

Merrill Edge Personal Retirement Calculator (Monte Carlo simulator) Retirement Calculator

Schwab Retirement Income Quiz

The Fidelity Retirement Score

TD Ameritrade Retirement Calculator

Vanguard Retirement Income Calculator

Vanguard Retirement Nest Egg Calculator



[1] See