The 10-minute retirement plan
Ok, that headline got your attention. Can you really make a retirement plan in 10 minutes? Yes, you can make a retirement plan in 10 minutes, but not your retirement plan that quickly. I’ll explain.
When you open a retirement planning tool, you’ll fill in basic info, such as age, income, and current retirement savings; that part is easy. Next, you could enter some general assumptions, such as expected Social Security benefit, investment returns, and inflation, again, pretty quickly if some of the numbers are guesses. At this point, a retirement calculator will lay out a plan that took about 10 minutes to create. It will show you how much savings you’ll accumulate and give you a sense of what you’ll have to live on throughout your retirement years. However, don’t be deceived by the simplicity to get to this point.
The problem - it’s just a plan, but not your plan. You’ll need to spend more time refining the initial plan, making it accurately reflect your situation, income needed based on expenses, etc., to have more confidence that your savings will last as long as you do. You’ll consider whether to stay in a large, paid-off house vs. a single-level 1br independent living arrangement. A tool can’t evaluate and cost out that decision; you’ll have to. And you’ll need to consider other questions you may not have ever thought about before, such as paying for assisted living or hiring in-home care.
Once you take the additional time to work through the answers and assumptions, updating the plan you made comes a step I call “stress testing”. What if your investments lost 20% tomorrow? What if expenses are 15% higher? What if a disability requires $75,000 in housing modifications? Basically, a wide range of what-if scenarios. You’ll begin to realize that assuming higher investment returns or large living expenses increases the risk of failure, which is difficult to recover from as the years go by. You’re likely to see a scenario where you run out of money early—working through the stress-testing forces you to be more conservative in your planning.
Finally, you’ll have a plan. How much to save, when you’ll retire, and start forming your retirement budget to gain the confidence that your numbers in the plan are pretty good. Getting to this point could take a few hours spread over several days. Thus, the 10 minutes turned into five or 10 hours, but the retirement plan is your plan. Except that it’s only the best plan as of today. The next steps are refinement and improvement over time; yearly if more than 5 years from retirement, and every few months in the years leading up to your retirement date. Trust me, you need to spend enough time creating a good plan (or pay someone to create it for you), but more importantly, make planning a process. Otherwise, you’re rolling the dice on whether any plan will still be accurate in the future when needed.
On a personal note, let me share my experience. I retired in mid-2020. I did my own planning, stress testing, etc. Even with the unknowns of the COVID pandemic, I felt very confident at retirement. But what happened since then? A fast recovery from the short COVID recession, then a bond market crash in 2022, followed by a mini-crash in April of 2025, since then, historic stock market highs. This was coupled with a rapid increase in inflation, followed by years of above-average inflation that is still not under control. When I look at my expenses, I will likely have them remain 10% higher for the rest of my retirement years. My saving grace has been that I have been able to keep investment returns a few percentage points above inflation during the first 5 years of retirement. And more importantly, 5 years have passed, meaning my savings now have to last 5 years less, so I’m well within the stress testing I did and remain confident of my planning and the way forward. But I wonder how many planned their retirement in 2019 or 2020 without considering the prospect of permanently higher expenses in their remaining years?
By the way, if you hire a financial planner, this is the job they should do for you. Not just to create an executable plan and stress test it for different scenarios, but also to refine it as time goes by. The challenging aspect is; if you went to three different financial planners, you would get three different retirement plans. While likely similar, they’re still different plans because of the assumptions and biases of the individual who created them. But any plan that someone else creates has to become your plan, incorporating your desires, assumptions, and considerations. That’s one of the reasons I promote learning and doing retirement planning yourself: you have the motivation and freedom to refine and adjust as needed, since you’re deeply involved in the process. Pros and Cons for each way to make a retirement plan, and you’ll have to decide for yourself. I’ll save that discussion for another day.
So, you’ll have to decide. A 10-minute random plan, 10 hours to custom build and stress test, or pay someone to do it for you. Ultimately, you are responsible for getting through the retirement years - one way or another - with the money you have and the decisions you made.