Retirement planning involves an analysis of the various choices you can make today to help provide for your financial future. To make appropriate choices, you need to predict—as well as you can—your future economic circumstances. You'll also need to establish your post-retirement goals. When you've determined how much of an income stream you'll probably require in the future, you'll be in a position to make wise choices now about income, saving, investments, and employer-sponsored or other retirement plans.
Of course, you need to tailor your retirement planning to your own unique circumstances—planning methods may be different for employees and executives than for business owners. Retirement planning involves evaluating your current financial standing and creating an accumulation strategy that will help to ensure a desired retirement lifestyle. Because an individual's retirement years can span decades, retirement planning generally dominates other financial goals. A successful plan put into place during the wealth-building lifespan should address ways to maximize growth and tax-efficient distributions, as well as how to leave retirement assets to the next generation.
Learning how to save for retirement is imperative. There are a number of retirement vehicles available, including employer-sponsored retirement plans, nonqualified deferred compensation plans, traditional and Roth IRAs, stock plans, employer stock options, and personal savings. Proper retirement planning requires an understanding of the workings of these various vehicles. You may find that qualified plans, IRAs, and social security won't provide enough money to support your desired retirement lifestyle. By identifying your retirement gap, you can develop a strategy for personal savings invested outside of the traditional retirement vehicle.
A number of additional retirement planning tools are often available for executives, such as nonqualified deferred compensation plans offered by employers to their key employees. If you're an executive, you should realize that nonqualified plans and stock plans can be valuable tools for retirement planning. You should understand the mechanics of the special benefits afforded by your employer, including the tax implications for you.
At the heart of any retirement plan is the distribution of accumulated assets. The correct distribution method can help to ensure that your retirement savings last beyond your lifetime with minimum shrinkage from taxes. From premature distribution options that may allow access to retirement assets prior to age 59 & 1/2, to products intended to provide stable monthly payments for retirement, distribution planning is paramount to a successful retirement plan.