Retirement planning

Plan your long-term financial future

With careful, proactive planning, you can be well prepared for a retirement that meets your expectations.

Overview

Planning for retirement may be one of the greatest financial challenges you face. Not only must you anticipate changes in your lifestyle, you must also be prepared for changes in the retirement landscape that will make your retirement different from the ones your parents and perhaps your grandparents had.

You’ll likely live longer, spend more time in retirement, and spend more of your retirement income on health care costs than previous generations. The benefits provided by Social Security may change before you retire. Fewer employers are providing traditional pensions.

These factors mean you have added responsibility for the long-term financial security of you and your loved ones.


Retirement planning basics

Given the number of factors that can impact longer-term financial goals, it’s essential to plan for retirement as soon as possible. Using the details of your retirement goals, taking advantage of the resources available to you, and being proactive by saving and investing to provide adequate income can go a long way to ensuring that you and your family will be able to enjoy the retirement you anticipate.

Sources of retirement income

The Employee Benefit Research Institute (EBRI) reports that the major sources of retirement income for US workers are employer-sponsored savings plans, Social Security, employer-provided pensions, continued employment, personal investments outside a work-related plan, and individual retirement accounts.

Employer retirement plans

You may have the opportunity of saving for retirement through an employer-sponsored retirement plan, such as a 401(k), 403(b), 457 plan or thrift savings plan (TSP). If you do, it may be one of the most effective long-term planning decisions you can make.

Individual retirement accounts

Whether or not you have a retirement savings account with your employer, you’re always eligible for your own individual retirement account (IRA) if you have earned income.

Annuities

Annuities are insurance company products that let you accumulate tax-deferred earnings and then convert your account value to a source of income from payments made to you by the insurer or annuity provider.

Other investment choices

In addition to tax-advantaged retirement plans, you may also want to include regular taxable accounts, such as a savings account or investment account, in your retirement portfolio.

Asset allocation for your retirement portfolio

All investments fall into different groups, called asset classes. Stocks are one asset class, bonds are another and cash or cash-equivalents, like CDs or US Treasury bills, are a third. The asset allocation you choose, which is the way you divide your money among these classes on a percentage basis, is important to building a retirement portfolio that can provide the long-term return you seek at the level of risk you are comfortable assuming.