Six Questions to Ask Before Changing Your Retirement Plan
In my previous post, I explained why a 30-year retirement plan cannot be treated as a "one and done" checklist. From unexpected health events to shifting personal priorities, your life should determine how and when your financial plan needs to adjust, not the other way around.
But not every change requires a new financial strategy.
And that's where the true tension in retirement planning lies.
On the one hand, underestimating the effects of a meaningful change could put your long-term security at risk.
On the other hand, overreacting to every market dip, unsettling headline, or argument with your spouse about money can cause lasting damage to your wealth.
The goal for retirees should be thoughtful adaptation, not constant reaction. Before you overhaul your portfolio, ask yourself these six questions to determine if your plan truly needs an adjustment.
1. What Specifically Changed?
When unexpected events occur, we tend to feel a mix of surprise, unease, and worry. If those feelings don't pass, we often move into problem-solving mode, looking for the action that will downshift our emotions back to neutral.
But if you're feeling particularly anxious in the moment, you might jump right into action before you've really assessed what's changed.
To gain some clarity, get specific.
Instead of worrying, "We’re spending way too much money lately," gather up your monthly budget, bills, and statements, and drill into the numbers.
You'll arrive at a clearer picture of what's changed: "Our living expenses are running $1,000 per month higher than usual. We've been eating out a lot more often. Also, the cost of our monthly gym membership increased. And this is the third month in a row we've had to repair the car."
Those clearly defined changes are easier to evaluate than a vague feeling of money slipping through your fingers. With clarity, you can start coming up with action items to reduce spending, like planning more at-home meals in advance, shopping for a new car, and looking for a more affordable gym.
2. Is the Change Temporary or Likely to Last?
Once you have identified the specific change, determine its duration.
For example, if it's time to trade in your old car that keeps breaking down, that's a temporary disruption. Your plan almost always has buffers in place to absorb these kinds of short-term shocks. After buying or leasing a new car, eventually you'll return to neutral. In the case of a car or home repair, you might even save money in the long run by permanently fixing the problem.
But if your spouse has a slip-and-fall that permanently changes your lifestyle and your monthly medical costs, you'll probably need to make significant changes to your withdrawal and healthcare strategies, as well as review your estate plan.
3. Is the Change Material?
Money is emotional, perhaps even more so once you're retired.
But while your feelings are always valid, following them towards rash money decisions can often lead to some irreversible consequences.
A change is only material if it affects:
Cash Flow: Does it permanently alter your monthly income or baseline spending?
Long-Term Solvency: Does it threaten your portfolio’s ability to sustain your standard of living for the next 20 to 30 years and react to future changes?
Tax Strategy: Does it push you into a higher tax bracket or trigger Medicare IRMAA surcharges?
Investment Risk: Does it force you to take more risks than you are comfortable with?
Family Commitments: Does it prevent you from fulfilling obligations to your loved ones or having bucket-list family experiences?
Lifestyle Priorities: Does it require you to change how or where you live?
An unexpected market drop might make you feel nervous.
Receiving a higher-than-expected tax return might make you feel happy.
But neither of those events is a material change to your financial situation. Sit with your feelings, talk through them with your spouse or advisor, and stick to the plan.
4. Can the Current Plan Absorb It?
Your retirement plan shouldn't just be designed to reap the benefits when the market is roaring. And it shouldn't only be able to support the goals and assumptions you made about your life the day you retired.
A comprehensive financial plan should anticipate some surprises and have enough built-in durability to absorb a few shocks.
At Keen Wealth, some of the tools and strategies we often recommend include:
Fixed income Investments: Keeping at least 3-5 years’ worth of living expenses in fixed income investments so you're not forced to sell equities for your retirement income or an unexpected expense during the inevitable market downturns that come from time to time.
Defined Spending: Differentiating between baseline expenses (housing, food, healthcare) and discretionary lifestyle expenses (travel, luxury upgrades) can help you identify where to scale back if necessary.
Diversified Income Sources: Budgeting around a reliable floor of income from sources like cash reserves, interest, dividends, Social Security, and pensions can maintain your daily lifestyle no matter what's happening in the markets.
If you have these kinds of buffers in place, you and your advisor can probably make a few minor adjustments to your plan rather than a major revision.
5. What Else Changes If We Act?
If you and your spouse want to take a spur-of-the-moment weekend getaway, or if your grandson needs a new bike, your normal cash flow probably won't notice.
But major money moves create a chain reaction of consequences.
For example, taking Social Security at 62 might help you meet an early retirement goal. But that choice also locks you into smaller benefits compared to waiting until your full retirement age. And depending on your other income sources, your benefits might be subject to taxation that diminishes them even further.
Buying a vacation home might make travel easier and give your extended family a place to gather at holidays. But paying for a second mortgage could also reduce your liquidity. You'll also be paying more every year in property taxes and maintenance costs. And how is this second home going to affect your estate plan?
When you can see these kinds of ripples, you and your advisor need to evaluate the change within the context of your entire plan.
6. Are We Responding Thoughtfully or Reacting Emotionally?
Again, your feelings around your money are always valid.
It's how you react to those feelings that often determines the long-term success of your financial plan.
Fear ("It's the biggest market drop ever!"), manufactured urgency ("I'm going to miss out!"), and sudden excitement ("I just inherited six figures!") are all enemies of sound financial judgment.
Emotional discipline is one of the most valuable financial skills you can develop in retirement. Before taking action in the heat of the moment, pause and reflect on these four honesty checks:
Would we make this decision if the headlines were different?
Have our goals changed, or are we simply uncomfortable?
Would waiting briefly give us better information?
Does the decision align with our long-term priorities?
Your answers will help you separate things that are urgent (a medical emergency) from things that only seem urgent (cable news investment "advice").
Helping You Decide
When you work with Keen Wealth, you're working with a decision partner who always puts your best interests first.
Let’s meet and discuss whether you’re facing a potential crossroads and the options that your plan provides.
About Bill
Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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