If we’ve said it once here on the AgingOptions blog, we’ve said it a thousand times: having a good retirement plan isn’t the same as having a good financial plan. So as we share this just-published article from the financial website Motley Fool, we feel we should alert you ahead of time that the article, as insightful as it is, is entirely about financial planning, not retirement planning. Ironically the first line of the article sounds helpful. “A happy retirement begins with a realistic retirement plan,” it says. However, Motley Fool’s definition of “realistic” differs from ours.

Spending Money Faster Than They Anticipated

That said, we think this article sounds some important alarm bells that retirees should pay attention to. It quotes a recent survey conducted by the Global Atlantic Financial Group involving more than 4,200 retirees and pre-retirees in which about 40 percent of retirees say they’re spending more in retirement than they had expected. This realization, says Motley Fool, has forced some major adjustments.  “For some, correcting this simply means cutting back on discretionary expenses, like travel or dining out. But for others, it can spell a real crisis if their savings run out prematurely.”

We took a look at the Global Atlantic Financial Group Survey, which revealed a bit more about this “financial reality-check” being experienced by two out of five retirees. Survey respondents listed the specific unpleasant surprises that had caught them fiscally off guard. About one-third told researchers they were surprised by the effects of inflation on housing costs and the general expense of day-to-day living. Just under one-quarter reported that they had been knocked off course by illness or high medical costs. About 15 percent, or one in seven, said a big culprit was high taxes. But regardless of the cause, many retirees find themselves adjusting their expectations and reducing discretionary spending on such retirement-associated lifestyle perks as dining out, entertainment and travel. As a result, says the survey, more than half say they have regrets concerning how well they prepared – or failed to prepare – for retirement.

Three Key Regrets Among Retirees

As the Motley Fool article reports, the three key regrets from the survey are not saving enough, relying on Social Security too much, and not paying down debt prior to retirement. “It goes without saying that if you don’t save enough, you will struggle in retirement,” says the article. “You may have to give up some of your dreams, like traveling around the world, or you may need to continue working part-time in order to make ends meet.” As for Social Security, it certainly will provide vitally important income for most retirees – but how much? “It’s important that you have realistic expectations,” Motley Fool warns. “The average Social Security check is about $1,375 per month, but yours may be more or less than this depending on your average income during your working years and the age at which you begin taking Social Security.” Most Americans start benefits before reaching full retirement age and as a result they lock in lower payments for the rest of their lives.

Warns the Fool article, these two issues – meager savings and less-than-anticipated Social Security income – can cause serious financial strain “which will only get worse if you carry debt into retirement. If it’s high-interest debt like credit card debt, it’s possible that it could spiral out of control, forcing you to deplete your retirement savings more quickly than you had anticipated. If it’s a home loan and for some reason you fall behind on your payments, you could lose the very roof over your head. That’s why it’s essential that you do what you can to pay down your debts before you enter retirement.”

Steps Toward a Basic Financial Plan

The article from Motley Fool includes some tips on creating what it calls “a realistic retirement savings plan,” and the advice is fine – but very limited and one-dimensional. The article lists these steps:

• Estimate the length of your retirement, based on your age, health and family history. People are living longer and the tendency is for retirees to underestimate how long their money will have to last once they retire.
• Calculate your annual living expenses in retirement. Some costs, like commuting and child care, will disappear, while others such as healthcare will likely increase. Once you have an annual estimate, remember to factor in inflation. “A good estimate is about 3 percent per year,” the Fool “If you’re struggling to do this math on your own, you can use a retirement calculator to do the hard work for you.”
• Figure out what your Social Security income will probably be and subtract that from your annual expenses. That’s the financial gap you’ll have to fill with savings, retirement plan withdrawals, or outside income from a job or perhaps a reverse mortgage.
• Pay down debt even while you’re saving for retirement. This can be tough, but it’s important. “You may want to look for ways to boost your income, like working extra hours or picking up a side job, if you’re struggling to pay down your debt and save for retirement at the same time,” Motley Fool

A solid way to approach this process in our view is to sit down with a trusted financial professional and have them work with you to prepare a retirement dashboard. It’s the best tool we’ve seen to help you gauge your financial health as you plan for your future. Contact us and we can refer you to the right person to help you.

Take a Much Wider View, Rajiv Urges

If you really want to establish a retirement plan that, in Motley Fool’s terminology, is “realistic,” we urge you to take a wider and more comprehensive view of the process, because retirement is about much more than money. Housing will also be a key consideration, so you’ll need to plan for where and how you’ll live as you age. Medical coverage will be central to an effective retirement strategy. You may need to set up a legal framework that will protect your loved ones and your assets while allowing you to access the care you need. Finally, since aging is a family affair, your family has to be entered into the retirement picture. Is there one approach that blends all these together into an effective retirement strategy?

Fortunately the answer is yes: it’s called LifePlanning, and only the professional team at AgingOptions offers it. We invite you to invest just a few hours and find out more by attending a free LifePlanning Seminar with Rajiv Nagaich, and allow Rajiv to open your eyes to retirement planning that accomplishes all you need in order to achieve the retirement of your dreams. You’ll find a calendar of currently scheduled seminars here on our AgingOptions Live Events page – then simply register for the free seminar of your choice. It will be our pleasure to meet you at an AgingOptions LifePlanning Seminar.

(originally reported at www.fool.com)