RETIREMENT PLANNING

The Need for Retirement Planning
For much of the 20th" century, "retirement" in America was traditionally defined in terms of its relationship to participation in the active work force. An individual would work full-time until a certain age, then leave employment to spend a few years quietly rocking on the front porch. Declining health often made retirement short and unpleasant. Retirement planning, as such, typically focused on saving enough to guarantee minimal survival for a relatively brief period of time.

More recently, however, many individuals are beginning to recognize that for a number of reasons, this "traditional" view of retirement is no longer accurate. Some individuals, for example, are voluntarily choosing to retire "early", in their 40s or 50s. Others, because they enjoy working, choose to remain employed well past the traditional retirement age of 65. And, many retirees do more than just rock on the front porch. Retirement is now often defined by activities such as travel, returning to school, volunteer work, or the pursuit of favorite hobbies or sports.

This changed "face" of retirement, with all of its possibilities, does not happen automatically. Many of the issues associated with retirement, such as ill health and the need to provide income, still exist. With proper planning, however, these needs can be met.

Common Retirement Planning Issues
Planning for a much longer life span involves addressing problems not faced by earlier generations. Some of the key issues:

• Paying for retirement: Providing a steady income is often the key problem involved in retirement planning. Longer life spans raise the issue of the impact of inflation on fixed dollar payments, as well as the possibility of outliving accumulated personal savings. Social Security retirement benefits, and income from employer sponsored retirement plans typically provide only a portion of the total income required. If income proves insufficient, a retiree may be forced to either continue working, or face a reduced standard of living.

• Health care: The health benefits provided through the federal government's Medicare program are generally considered to be only a "foundation." Often a supplemental "Medigap" policy is needed, as is a long-term care policy, to provide needed benefits not available through Medicare. Health care planning should also consider a "health care proxy", allowing some one else to make medical decisions when an individual is temporarily incapacitated, as well as a "living will" which expresses an individual's wishes when no hope of recovery is possible. 

• Estate planning: Retirement planning inevitably must consider what happens to an individual's assets after retirement is over. Estate planning should ensure not only that assets are transferred to the individuals or organizations chosen by the owner, but also that the transfer is done with the least amount of tax.

• Housing: This question involves not only the size and type of home (condo, house, shared housing, assisted living), but also its location. Such factors
  as climate and proximity to close family members and medical care are often important. Completely paying off a home loan can reduce monthly income needs. A "reverse mortgage" may provide additional monthly income.

• Lifestyle: Some individuals accustomed to a busy work life find it difficult to enjoy the freedom offered by retirement. Planning ahead can make this transition easier.

Seek Professional Advice
Developing a successful retirement plan involves carefully considering a wide range of issues and potential problems. Finding solutions to these questions often requires both personal education, and the guidance of knowledgeable advisors, from many professional disciplines. The key is to begin planning as early as possible.

Seeking the Ideal Retirement Alternative
There are many possible retirement alternatives available today which can be used to accumulate funds for one's retirement "nest egg." Some examples include:

However, the complexity of today's tax laws and government regulations which pertain to qualified retirement plans has prompted many professionals and business owners to seek alternative ways to provide for their retirement years.

Desirable Features In a Retirement Vehicle

• No legal, accounting or actuarial costs.
• No annual administration costs.
• No complex rules regarding discrimination.
• A provision for automatic withdrawal of money from one's checking account or paycheck.
• A conservative investment policy.
• A death benefit which is income tax-free.
• Contribution of pretax dollars.
• Tax-deferred accumulation of funds.
• Withdrawal of funds without penalties or taxation.
• Provide alternative choices to maximize your situation.