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Planning for Retirement

Okay, so let's hope we work because we love what we do. But, let's be real and honest for a second. Most of us work with one ultimate goal in life which is a nice, cushiony retirement. Thoughts of living on the beach, playing golf, gardening, traveling or simply spending time at home is what fills our minds as we fight the everyday traffic and long hours at work. No matter how old or how young you are, we've developed some tips and resources to help you achieve your retirement goals and hopefully do the things that make you happy while still working.

Proper Planning
The big question everyone seems to ask is: "When should I start saving for retirement and how much should I save?" Well, there's no better time than the present. The second part of the question is a little more complicated and depends on where you are currently in your life and when you plan on retiring. The sooner you start building your retirement funds, the more income you will have when it comes time to quit the work force for good. You should consider a retirement plan as soon as you accept your first real job.

Cool Hookup: Use this retirement calculator to determine if you are on the right track to the retirement of your dreams.

One of the most common plans to consider is a 401(k) plan, if available at your company. A 401(k) plan is, according to the IRS, a defined contribution plan. You designate a percentage of your salary to be contributed to the plan. Most employers will match up to a certain percentage, so if you can afford to contribute the maximum your company matches, then you should definitely go for it. A match is one of the quickest returns you will ever enjoy on your money. The contribution will come out of your paycheck each pay period, and any earnings are tax-deferred until you decide to draw the money out.

Fun Tip: The life expectancy for people who live to age 65 is an additional 18 years, or to age 83, according to the National Center for Health Statistics. The life expectancy for those who live to age 65 is higher for women, almost 20 years, than for men, almost 17 years. (Source: Facts about Older Americans and Retirement, The Associated Press.)

Another retirement plan some employers still offer, though it's definitely not as common as it used to be, is a pension plan. A pension is a steady income given after retirement. It is a form of deferred compensation, meaning a portion of an employee's income is paid out at a date after which that income is actually earned. Pensions are advantageous to both employees and employers for tax reasons. The best part about a pension is it usually features an insurance aspect, since they often will pay benefits to survivors or disabled beneficiaries.

Another retirement plan to investigate is an IRA (individual retirement account). There are a number of different types which may be employer-provided or self-provided. The most common types are the Roth IRA and the Traditional IRA. A Roth IRA has fewer withdrawal restrictions and requirements, while tax-deductible contributions are a major benefit of Traditional IRAs. Both types incur no tax liability on transactions inside the account (including capital gains, dividends, and interest).

Fun Tip: If you plan on changing jobs or leaving a job, don't leave your investments behind. Consider consolidating your investments into a Rollover IRA. Or, if your new job offers a 401(k) plan, look into your options of rolling your old 401(k) into your new one.

Shameless Plug: Before you make any major decisions, consult with the professionals. Our investment experts can assist in creating a personal financial management program you can follow in order for you to achieve your monetary objectives. For more details, click here.

Social Security
Social Security is part of the retirement plan of almost every American worker. Retirement benefits derived from Social Security depend on your birth, the age at which you retire and how much you earned during your working career. There is a constant debate on whether today's generation will even get to benefit from Social Security. With that said, you should not count only on Social Security for your retirement income. It's better to diversify and spread your wealth.

Cool Hookup: If you are among the 96 percent of workers who are covered under Social Security, you should know how the system works and what you should receive from Social Security when you retire. Click here for an online booklet with frequently asked questions about Social Security.

Building the Perfect Portfolio
When building your retirement portfolio, remember to diversify. Generally, if you're young and have more time to invest before retirement, you may want to invest more money in stocks or stock funds, in order to pursue higher potential returns. An aggressive growth model may serve you better than a conservative one. Regardless of whether you choose high risk, low risk or moderate, don't put all your eggs in one basket. Invest in different companies, industries, countries or business types. That way you can keep your savings from being too dependent on one investment. In addition, you should consider all investment options, including Certificates of Deposit (CDs) and money markets. While these options are more accessible and therefore more tempting to touch than a 401(k) plan or an IRA, they are designed to grow your money. And if you do get in a bind or just want to live in the moment and splurge, tap into these investments before you touch your true retirement funds.

Cool Hookup: In recent years, retirees have been moving in several directions, not just one. In particular, there are four types of retirees really shaking things up. Click here to find out if you are a "Zoomer", "Ruppy", "Huddler" or "Boomerang".

Working After Retirement
It's becoming more and more common and dare we say "trendy" in today's society for people to come out of retirement. Unless you just love to work or are Michael Jordan, let's make sure you're coming out of retirement for fun and not for necessity. If you do elect to join the work force again, whether it's part-time or full-time, be sure to discuss with your financial advisor key topics like: how it will affect your social security, should you invest in your new company's retirement plan, what will you do with your current retirement savings, etc.

Cool Hookup: Visit for a host of articles related to retirement and advice for workers over 50.

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