Want to know if your retirement plan can stand up to the curveballs life’s going to throw at you? Stress-test it!

We plan for long retirements—three or four decades … or more. Especially for retirees who have careers like yours where retirements often begin in your early 50s or even sooner. And over that time, a lot can happen. Some that’ll positively impact your retirement plan and some that will definitely challenge your retirement plan. Stress-testing your plan, checking its resilience against as many scenarios as you can come up with, is just a good idea and a smart step toward entering retirement with the peace of mind knowing you (and your family) are going to be OK.

So what are the kinds of things you want to stress-test your retirement plan for? For starters, inflation is something everyone needs to be concerned about. What if you were to experience a prolonged period of inflation in retirement—something beyond what we’ve grown accustomed to? Will you have enough coming in to at least maintain your standard of living?

Another concern is, and I’m serious now, what if you lived a long time—like a really long time? Something beyond average life expectancy? It does happen, and it can really stress out your retirement plan if there’s no room built in for this.

Other considerations are market returns being well below the long-term averages. Or healthcare costs and unexpected long-term care costs becoming significant, especially for seniors. All of these can really do damage if they aren’t taken into consideration.

So how do you stress-test your retirement plan? It starts with having good inputs. Gather all your financial documents, including your account statements, your portfolio details, your Social Security estimates, your pension and DROP information or your Investment Plan information, including how it’s invested, and anything else that’s part of your retirement plan.

Next, you’ll want to know what your expenses are going to be. Probably, in most cases, not too different than your current level of expenses. But make sure you’re accounting for everything you spend.

I know, when we do this for clients, this can often be the most challenging step, making sure we’ve accounted for everything. But there are good and fairly easy ways to do this. There are retirement calculators online that can really help. Just Google “Retirement calculators for stress testing my plan,” and you’ll have quite a few options to choose from. The point is, you want to create less-than-favorable scenarios or models to run your plan through and see how it stands up.

And it’s important to do this regularly. Doing this once, just before retirement, isn’t enough. Good retirement plans are dynamic and adaptable. And reviewing and updating them when significant life events occur, such as a marriage, birth of a grandchild, or when unexpected financial windfalls or setbacks occur, is critical to your success.

At Northstar, we have sophisticated programs our clients have access to that help them clearly see if their retirement plans can stand up to what life throws at them. We have years—decades—of experience working firsthand with FRS Special Risk retirees. Experience we can pass on to help our clients achieve their most important retirement goals.

Want us to help you stress-test your retirement plan? It starts with you reaching out to us with a simple phone call or email. I think you’ll be glad you did. Thanks for watching and stay safe!