Getting Started...Steps to Creating a Financial Plan for a Secure Retirement

From the Employee Benefits Security Administration's publication Savings Fitness: A Guide to Your Money and Your Financial Future, available to consumers by calling 1-866-444-3272, and the Certified Financial Planner Board of Standards.

  1. Start by writing down each of your goals on a 3" x 5" card.
  2. Create two stacks – goals you want to accomplish within the next five years or less and goals that will take longer than five years (you'll save for these goals differently).
  3. Sort the cards within each stack in order of priority, based on how hard you are willing to work or save to reach each goal. Make retirement a priority.
  4. Write on each card what you need to do to accomplish that goal, plus when, what it will cost and how much you'll need to save each month to reach your goal.
  5. Prioritize again, creating a "dream" stack and a "reality" stack to guide your saving and spending.
  6. Create a snapshot of your finances by calculating your net worth – the total value of what you own minus what you owe. Include in this snapshot of your financial resources items such as personal possessions, vehicles, home and other real estate, checking and savings accounts, insurance policies, stocks and retirement plans. On the liabilities side, consider your home mortgage, credit card debt, student or auto loans and taxes/capital gains owed.
  7. Envision your retirement and the monthly resources you'll need in retirement, along with when you want to retire.
  8. Estimate how large your nest egg will need to be to "buy" your retirement goal.
  9. Use a worksheet or software program to help calculate how much you'll need to save every month and the return on investment you'll need to reach your goal. Some useful financial calculator Websites have been provided in the Department of Labor's new booklet on page 20.
  10. Create a spending plan for your monthly income that starts with your "payment" to your retirement savings plan designed to build the resources you'll need for the retirement you desire.