Retirement Planning

It's never too late, nor too early, to begin planning for retirement. You may have dreams about how you want to spend those "golden" years — resting comfortably on a sunny beach, traveling the world to exotic places, writing the great American novel, or catching up on that reading you always wanted to do. These dreams, however, can't materialize unless you actually take the steps necessary to make them a reality. And that requires adequate planning.

It used to be that a person worked for the same company for 30 or 40 years, retired at 65, collected the employer-provided pension and government-provided social security benefits and then lived out their few remaining years in relative comfort. Now, frequent job changes are the norm, and many more of us are striking out on our own. The increased job mobility makes it more difficult to accumulate significant retirement benefits. Inadequate funding has generated concern about the future of the social security system. And, lifestyle changes, improved technology and medical advances mean people can expect to live longer than ever before.

At first, retirement planning may seem somewhat daunting. It's scary to consider things like your life expectancy and potential health care needs, especially when you're faced with the more immediate problems of financing the kids' education or a parent's stay in a nursing home. But the fact is, adequate planning is more important now than ever before. You can no longer rely on your employer or the government to provide for your retirement years. You must take personal responsibility for your future and plan for those 20 to 30 years (or more) after the regular paychecks stop, or after you retire from active participation in your business.

Solid retirement planning can be done and will probably be easier than you thought. Some of the pieces may already be in place and may need only a little fine-tuning. In other areas, you may need to start from scratch. Just remember to be flexible — you're aiming at a moving target and you will continue to make adjustments as you go. What is important is that you take control, regardless of where you are right now.

The following information will get you started and help you through the retirement planning process.

The major considerations in planning for your retirement are:

• Estimate your retirement needs. Where will you live? What will be your lifestyle?
• Estimate what you currently have. Take a look at the benefits for which you're already eligible, plus your current investment holdings. Will this be enough for retirement?
• Estimate your Social Security benefits. For those nearing retirement, Social Security benefits are likely to provide a large portion of their income.
• Estimate your benefits under any employer's pension plan. You may be eligible based on former jobs, or you may have established one yourself.
• Estimate your benefits from other retirement plans. Self-employed people may choose from Keoghs, IRAs, SEPs, or SIMPLE plans.
• Determine how to bridge the gap. This may depend on how much time remains until retirement and how much risk you are willing to take in your investment strategy.