The financial world is overly complex on purpose, not always to your benefit.

As you’re doing the research to improve your retirement plan, you might start to feel overwhelmed. There are thousands of investment options, whether it’s ETFs or funds or alternative investments. And then there’s also these changing tax rules or account rules. And there’s also the ever-changing economic and market landscape that can cause you to just kind of say, “You know what? I’ll just forget about it for now and figure it out later.” Or you might decide to talk to a professional to help you make sense of everything, but when you meet with them it feels like they’re speaking a different language.

We’re going to focus on the three most important things to get right when planning retirement, and then if you desire to, you can always build on top of that and get more complex if you find it necessary. Before we get into the three factors, I want to make sure you know which type of investor you are.

Which Type of Investor Are You?

The DIY investor realizes that what got them here might not be the best thing moving forward into retirement, but they really love the learning; they love the research and the studying, strategies, and the implementing of ideas. That’s the DIY investor.

Next we’ve got the DIY investor that really wants a one-time travel agent. Sometimes when you’re traveling, you get to this new country and something changes that you weren’t prepared for. In real terms, the economy, the markets, or new laws impact that financial plan, or your life changes and the plan needs to be adjusted. It’s kind of like the travel agent does everything set up beforehand, but it’s up to you when you get to that foreign country.

Then finally, the third person is someone who is the traveler, and they would rather have a tour guide go with them, and the tour guide speaks the language and can change the flat tire when the bus breaks down.

Out of the three, who are you most likely to be?

Step 1: Track Your Expenses

Number one is just getting the income plan set. If you haven’t already or you don’t know, track the expenses to find out what it takes to run the household so you can figure out how much you need. Usually it’s whatever you need to run the household, and then some of the wants – travel, entertainment, eating out, etc. Let’s say you need 5K a month, or 60K a year. Subtract what social security might be and that’s how much you need per year from investments.

For this first step, keeping it simple, use the basic 4% rule to see where you’re at. Divide that number of 40K, divide it by 0.04. Although it’s not perfect, the 4% rule is not perfect, don’t base your whole plan on this, it gives you the first simple foundational step.

Step Two: Your Investment Plan

Number two, the second thing you want to get right is get the investment plan. For the majority of people, a simple four fund solution could accomplish what they need. In order to have diversification and multiple asset classes to handle these different economic seasons, there’s a lot of low cost funds and companies out there that can provide that solution for you.

The second part of the investment plan is to think about the risk factor. You’ve heard about the bucket strategy – a conservative bucket, a moderate bucket, and a growth bucket. This can bring peace of mind to know how much you have saved in the conservative bucket so that when things aren’t looking good, you can reassure yourself.

Thinking about this bucket in terms of number of years is helpful. For instance, if you needed that 40K per year and you had 200K in this conservative bucket, then you’ve got about five years’ worth of income to ride out whatever downturn we have. You don’t want to have to sell the growth or moderate buckets when things are down.

Step Three: A Simple Tax Plan

Number three is to create a simple tax plan. The key here is to not pay more tax than is necessary. Say you’ve got your pre-tax accounts – let’s just call it IRAs or 401(k) – you’ve got the Roth, which is the after-tax, and then the non-retirement. Plan out how much you’re going to be pulling from each account during the retirement years to be as efficient as possible.

The withdrawal strategy of traditional planning will say don’t touch your IRA and 401(K) or your Roth because it is tax deferred or tax-free. You might try to let it accumulate and grow, but that doesn’t always make sense for everyone. It may be better to use this money first, especially if you’re thinking about converting money in that Roth IRA sweet spot a lot of people find themselves in after they retire once their taxable income has gone down.


Start thinking about these three things – tracking your expenses, a simple investment plan, and a tax plan – and focusing on the most important parts of your retirement journey. You can always build off of this and get more complex if you need to.

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Disclosures: Securities offered through LaSalle St. Securities LLC (LSS), member FINRA/SIPC. Advisory services offered through LaSalle St. Investment Advisors LLC (LSIA), a Registered Investment Advisor. Streamline Financial Services is not affiliated with LSS or LSIA. LSS is affiliated with LSIA.