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Retirement Planning

Planning for retirement can be uncomplicated if you take the time to assess your needs. Whether you are just getting started with your savings, investments, IRA, or company retirement plan or if you have been contributing for years, determining what you will need at retirement is a valuable process. It will help you to know if you are on track to reach your retirement goals or if you need to save more money.

After determining your savings goals, it is extremely important to design an investment strategy that adequately supports those goals. An asset allocation strategy is crucial to your financial success and the long term vitality of your retirement savings.

Equally important is properly listing the beneficiaries for your retirement savings accounts. In most employer-sponsored qualified retirement plans, your spouse is required to be named as the beneficiary, but IRAs are different. You can name anyone as the beneficiary of your IRA account, so you must be aware of the consequences of naming non-spouse beneficiaries.

And finally, it is easy to get into something but it is always much more difficult getting out. This begs the question: How do I take money out of my retirement savings in the most effective way? You must think about taxes, potential penalties if you are not 59 1/2, and maximizing your wealth. The last thing that you want to do is lose a significant portion of your retirement savings in the form of taxes.

While retirement planning is not difficult, it is important to work with a knowledgable advisor that can help you design a gameplan that will meet your retirement goals and objectives.

Money 101 - Planning for Retirement

Top things to know...

  1. Save as much as you can as early as you can.

    Though it is never too late to start, the sooner you begin saving, the more time your money has to grow. Gains achieved each year build on the prior year's gain - that is the power of compounding, and the best way to accumulate wealth.

  2. Set realistic goals.

    Project your retirement expenses based on your needs, not rules of thumb. Be honest about how you want to live in retirement and how much it will cost. Then calculate how much you must save to supplement Social Security and other sources of retirement income.

  3. A 401 (k) is one of the easiest and best ways to save for retirement.

    Contributing money to a 401(k) gives you an immediate tax deduction, tax-deferred growth on your savings, and usually, a matching contribution from your company.

  4. An IRA also can give your savings a tax-advantaged boost.

    Like a 401(k), IRAs offer huge tax breaks. There are two types: a traditional IRA offers tax-deferred growth, meaning you pay taxes on your investment gains only when you make withdrawals, and if you qualify, your contributions may be deductible. A Roth IRA, by contrast, doesn't allow for deductible contributions but offers tax-free growth, meaning you owe no tax when you make withdrawals.

  5. Focus on your asset allocation more than on individual picks.

    How you divide your portfolio between stocks and bonds will have a big impact on your long-term returns.

  6. Stocks are best for long-term growth.

    Stocks have the best chance of achieving high returns over long periods. A healthy dose will help ensure that your savings grows faster than inflation, increasing the purchasing power of your nest egg.

  7. Don't move too heavily into bonds, even in retirement.

    Many retirees stash most of their portfolio in bonds for the income. Unfortunately, over 10 to 15 years, inflation easily can erode the purchasing power of bonds' interest payments.

  8. Making tax-efficient withdrawals can stretch the life of your nest egg.

    Once you are retired, your assets can last several more years if you draw on money from taxable accounts first and let tax-advantaged accounts compound for as long as possible.

  9. Working part-time in retirement can help in more ways than one.

    Working keeps you socially engaged and reduces the amount of your nest egg you must withdraw annually once you retire.

  10. There are other creative ways to get more mileage out of retirement assets.

    For instance, you might consider relocating to an area with lower living expenses, or transforming the equity in your home into income by taking out a reverse mortgage.

Investing in stocks involves risk, including loss of principal.  Past performance is not a guarantee of future results.  Bonds are subject to market and interest rate risk if sold prior to maturity.  Bond values will decline as interest rates rise and are subject to availability and change in price.