Retirement Planning

Plan For Tomorrow, Today

Whatever retirement dreams may be — a comfortable home on the golf course, free time to spend with your grandchildren, or even a cross-country journey or trip around the world — the goals you dream about today could be yours tomorrow, provided that you understand what is required to fulfill them, set a course to meet the challenge of doing so, and seek solid professional assistance along the way.

While your retirement date may still be several years off, and the goals you set today may seem even further off, it is never too early to begin preparation. A look at factors that affect the future of all retirees can help you focus on the importance of preparing for the future now. Consider the following:

• Inflation, whether high or low, affects investment dollars steadily, year-by-year reducing their "real" value and thereby reducing the purchasing power you will have to make your retirement more comfortable and less stressful.
• Investment choices are plentiful; it takes time to study all the options and decide which are best for you.
• Escalating medical costs affect both young and old, but can be devastating to retirees on a fixed income.
• Increased longevity and early retirement are providing Americans with more "golden years" to enjoy — and to plan for.

Explore Sources of Retirement Income 

If you are working now, it may be difficult to imagine how you would live without the annual income from your job, career, or business. Perhaps you have some investments, but wonder how they could produce enough earnings to replace your employment income without depleting principal.

You will most likely be able to count on some Social Security retirement benefits, but remember that the more you earn now, the smaller the percentage of your income that will be replaced by Social Security after retirement. With more and more companies offering defined contribution plans instead of traditional pensions (defined benefit plans), you may already be enrolled in an employer-sponsored retirement plan, such as a 401 (k), which offers you tax-deferred, regular savings. Even so, the reality is that you, like most people, will probably need to implement a personal investment plan to successfully fund your retirement.

Know Your Investment Profile

Once you realize that you need an investment plan and have set your retirement funding goals, it is time to choose your investments. Consider the following:

• The Time Available to Build Your Nest Egg. The number of years between now and when you retire will affect your choice of investments. Consider investments designed for growth, income, or a combination of both.
• Your Investment Personality. Understanding this is a critical, but often overlooked, ingredient in your financial planning. Insight into your risk tolerance will allow you to choose the investment vehicles best suited for your personal profile and your retirement funding goals.

Look at Investment Options

There are many investing opportunities available to you. Look for the current tax deductibility of contributions (available in some cases through IRAs) and tax deferral of earnings (available in numerous retirement plans, such as IRAs). Click here for further information on investment options.

Look at Return on Investment

How much will you need to save to fund your retirement goal? Click here to review a chart that shows how much you need to save to reach a particular target (in this case $100,000) in a given number of years, as well as what you will receive on a monthly basis once you have accumulated your nest egg.

Although your retirement date may still be many years off, it is never too early to start your preparation. Even if you can only save a small amount at the outset, the key is to start early and continue on a regular basis. The more you know about investing for your retirement years, the more comfortable and secure your future may be.