Retirement planning is an integral part of your overall financial plan. Strategies should be designed to suit your goals and comfort level as well as to take advantage of tax saving opportunities. For any plan to be effective, it is necessary to implement these strategies and to review your goals and progress periodically.

The amount you will need in retirement depends on the age you plan to retire, your desired retirement lifestyle, how long you expect to live and the rate of return you expect to earn on your investments. Social Security and employer-sponsored pension plans may possibly provide a smaller percentage of what you will need than they did for your parents. The most important aspect of projecting your future needs is estimating how much you will have to save each year to produce the income you need to maintain your standard of living after you stop working. If you are already retired, planning is critical to insure you do not outlive your money.

Know your tolerance for risk

If you have a long time horizon until retirement, assets that have the potential for significant growth over the long term should be considered. However, it is important that your investment choices be consistent with the level of risk that you are willing to assume. In addition, good financial planning must always take inflation into account. If you disregard inflation, you may end up investing too conservatively. Together we can determine a suitable mix of investments that meets your objectives, time frame and risk tolerance.

Increase your savings rate

Saving more for retirement is difficult because it requires spending less money now. However, you will have a much better chance of reaching your retirement goals if you contain or reduce) your current standard of living and save as much as you can. Many planners recommend saving at least 10% to 15% of your gross earnings before tax, to saving for retirement.

Reduce Spending during retirement

While many retirement professionals estimate that you need between 70% and 80% of your pre-retirement income to maintain your standard of living during retirement, we don’t see it that way. Planning should have the goal of maintaining or bettering your standard of living in retirement.

Delay Retirement

Retiring later has several benefits. First, you have contributed to your retirement plan for more years, and typically, your earnings are higher at the end of your career. Second, retiring later means retirement plan contributions continue longer, and are based on higher income amounts. Retiring later gives a much better chance of not running out of money, and insuring a better quality of life during retirement.

Maximize Contributions to Qualified Retirement Plans

Most retirement plans have are deducted from current taxable income, thus saving taxes, and, the account grows tax deferred.

401(k) Plan

A retirement savings plan funded primarily by the pre-tax contributions of employees; employers frequently match contributions to encourage participation.

403(b) Plan

Similar to the 401(k), this type of retirement plan is funded primarily with employee elective salary deferrals. This type of plan is limited to public schools, public hospitals, and tax-exempt or non-profit organizations such as religious, charitable, or scientific institutions.

Individual Retirement Account (IRA)

IRAs are Individual Retirement Accounts that let your investments grow tax-deferred until you begin regular withdrawals which are required after reaching age 70 ½, but may occur as early as age 59 ½ without penalty Contributions are limited, and deductibility of contributions depends on salary level and whether the IRA owner participates in an employer-sponsored retirement plan.

Roth IRA

In Roth IRAs, individuals contribute after-tax dollars to the account. Contributions are non-deductible, but the growth of these investments can be distributed tax-free. A Roth IRA permits tax-free and penalty-free withdrawals of earnings after five years, and withdrawals of contributions at any time. Roth IRAs are not subject to the minimum distribution requirements.

Spousal IRA

The Spousal IRA allows a working spouse to make contributions to an IRA for a non-working spouse, if the spouses file a joint tax return for the taxable year and the amount of compensation in the non-working spouse’s gross income for the taxable year is less than the compensation includable in the working spouse’s gross income for the taxable year.

SEP

A Simplified Employee Pension (SEP) is a plan whereby employers make contributions to their employees’ retirement accounts. A self-employed individual can also utilize a SEP.

SIMPLE

Savings Incentive Match Plans for Employees (SIMPLE) plans allow certain small employers to set up a retirement plan for employees. A self-employed individual can also contribute to a SIMPLE for him or herself.

Defined Benefit Plan

A defined benefit plan promises a specified benefit at retirement. The employer estimates the benefit, generally based on a formula that considers length of service and compensation, and makes contributions to the plan.

Profit Sharing

Under a profit sharing plan, the employer must agree to a specified formula of allocating contributions to all participating employees. However, the employer is not required to contribute a specific percentage of profits, and has the discretion to make no contributions at all in any given year.