A recent study conducted by Merrill Lynch in collaboration with Age Wave examined the priorities Americans place on different areas of life to help financial planners provide more effective retirement guidance. The report, “Finances in Retirement: New Challenges, New Solutions,” explored seven focus areas: family, health, home, work, leisure, giving, and finances. While priorities naturally shift over time, the study sheds light on the issues retirees and pre-retirees need to consider beyond simply accumulating savings.
The research combined interviews with national thought leaders, focus groups, surveys, and roughly 3,700 individual interviews. About half of the respondents were Baby Boomers, aged 52–70, with the rest representing younger and older cohorts. Over multiple years, the study underscored the changing challenges many Americans face when planning how to finance retirement.
This study highlights an important point: many seniors and their advisors concentrate heavily on building savings, which is essential, but retirement planning involves much more than a healthy nest egg. The following practical items are critical to address early so retirement is not only affordable but also comfortable and well-organized.
Other crucial retirement planning to-dos
1. Explore your housing options
Where you plan to live in retirement has a major impact on your financial strategy and day-to-day life. Do you want to remain in your current home, move into a senior community, or relocate to a different area or country? Each choice carries different financial and logistical implications.
If you plan to age in place, prepare for rising home maintenance needs and the potential need for in-home assistance or home health care. If you are considering a continuing care retirement community (CCRC), also known as a life plan community, start researching options early and consider joining wait lists, since availability and contract types vary.
Thinking ahead about mobility changes and the possibility of needing daily living assistance will help you choose the right living arrangement and budget accordingly.
2. Consider your potential long-term care needs
Long-term care (often referred to as assisted living or personal care) includes services that help with activities of daily living—such as eating, dressing, and bathing—and can extend to skilled nursing care when medically required. Statistically, a significant portion of older adults will need some form of long-term care at some point.
Long-term care insurance (LTCi) can help offset these costs and protect assets. For those who wish to remain in their homes, LTCi may cover in-home care expenses. LTCi policies vary widely in coverage, limits, and cost, so it’s important to evaluate options carefully.
If you plan to move into a CCRC, whether you can drop an LTCi policy depends on the community’s contract structure and the level of services included. In many situations, keeping at least some coverage still makes sense to protect against unexpected needs or to supplement the community’s offerings.
3. Designate beneficiaries and complete your will or trust
Estate planning is essential regardless of the size of your estate. Keep beneficiary designations current on life insurance policies, retirement accounts, and other assets, and review them regularly—annually is a sensible cadence.
A will is a straightforward way to outline how your assets should be distributed and can often be created affordably. A will, however, usually requires probate, a legal process that validates the will, settles debts, and distributes assets. Probate can be time-consuming and costly, which may reduce what beneficiaries receive.
Trusts offer additional benefits: they can operate during periods of incapacity, help avoid probate, enable quicker access to assets for beneficiaries, and in some cases reduce estate taxes or shield assets from creditors. Trusts typically require legal assistance to draft, making them more expensive upfront, but they provide ongoing protections and flexibility that many people find valuable.
4. Create advance directives and power of attorney
Many people avoid thinking about serious illness or incapacity, but having legal documents that state your preferences and assign decision-making authority is critical. Advance directives, often called living wills, provide guidance to healthcare professionals and caregivers about your wishes if you become terminally ill, incapacitated, or unable to communicate.
Designating a power of attorney names an agent who can make financial or medical decisions on your behalf if you cannot. Different powers of attorney grant varying levels of authority, so you can limit or broaden the agent’s powers depending on your needs and comfort level. Establishing these documents in advance avoids confusion, ensures your wishes are respected, and can reduce stress for loved ones during difficult times.
Are you ready for retirement?
Saving consistently over the years is a vital foundation for retirement, but it is only one piece of the puzzle. To ensure a secure, comfortable retirement, take time to explore housing choices, plan for potential long-term care, update beneficiaries and estate documents, and prepare advance directives and powers of attorney. Addressing these areas ahead of time will help protect your finances, preserve your preferences, and ease transitions for both you and your family.