RETIREMENT PLANNING

RETIREMENT PLANNING

Retirement planning is a complex subject, and the terminology involved can be intimidating to many people, with Traditional, Roth and SEP IRAs, 401k/403b plans, Keogh plans etc amongst the retirement options. Complicating matters further, Retirement Planning is evolving beyond merely financial matters to embrace designing the life you really want in your later years; ie, effectively, Life Planning.

Retirement planning can also include Dream Planning - there may be many things that you might have missed out on due to a hectic life and time constraints that are a possibility in a well-funded Retirement Plan. With increased life expectancies, your retirement can last 20-30 years. Plan to Live the Dream!

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While traditional gender roles are fading fast, retirement planning is still a particularly important issue for women, because, on average, women live longer, may earn less, and may spend fewer years in the workforce than most men do, especially if they have children.

Retirement Planning centres around setting realistic goals and establishing a consistent plan to achieve them; financial self-sufficiency is essential to enjoy one's old age. Begin planning now, regardless of age or circumstances. Most retirement planning experts agree that you should not count on Social Security for more than about a third of your total retirement income. Begin investing what you can now and try to increase this amount wherever possible - remember, even small amounts can accumulate and compound significantly over time.

Inflation will continue to erode your retirement purchasing power, and must be part of your retirement planning. Social Security may be around when you retire, but the benefits may not provide enough income for the retirement lifestyle you want. Making matters worse, few employers these days provide a traditional company pension plan that guarantees you a specific retirement income.

Establish an overall investment plan as early as possible, diversify your portfolio, and maintain realistic performance expectations. Accumulating relatively safe blue-chip stocks and holding on to them over the years may provide more security and benefits in the long run as taking risks on "get-rich-quick" schemes.

Of course, security prices can fall, as we saw with stocks in 2000-2001 and are now experiencing in 2008 – however, blue chips tend to bounce back better.

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Tax-deferred and tax-deductible schemes such as 401k/403b plans, Keogh plans, IRAs, and annuities can help grow your retirement savings. Diversify your assets based on your risk tolerance, expected retirement date, how long you expect to live and the standard of living you want in retirement. Taxation should be discussed with a qualified tax professional. Taxpayers making less than $100,000 a year may now convert some or all of their old IRA to a Roth IRA, but will have to pay taxes on the amount transferred. Beginning in 2010, people with incomes of more than $100,000 may convert a traditional IRA into a Roth IRA.

Health will also be a factor in retirement planning. Are you healthy now, or are health care costs already a burden? As you get older health care costs will almost certainly rise and need to be factored in. Living longer is only a blessing if you are fit enough and sufficiently well funded to enjoy it!

Finally, there is the issue of where to live. While some States – and even Mexico or Asia - offer the advantage of a lower cost of living, this has to be balanced against the loss of family and friends and a familiar environment.

We discuss all of these Retirement Planning issues more fully on other pages of www.retirement-videos.com and include some videos.