Planning for Retirement Needs

Copyright © 2007, The American College. All rights reserved. Used with permission.

Planning for Retirement Needs

Introduction toIndividual Retirement

PlanningChapter 20


Chapter 20

• Translating pension knowledge into solutions for individual clients

• The retirement planning process

• Critical issues that affect retirement


Transferable Skills• Understanding the benefit or contribution

formula• Understanding the plan’s key provisions

(hardship withdrawals, loans etc.)• Identifying documents (SPDs, personal

benefit statements)• Appreciating the importance of before tax

contributions• Ramifications of starting social security early


Transferable Skills

• Choosing a Keogh plan for clients with Schedule C income

• Recognizing the importance of ESOP diversification

• Determining IRA options• Explaining the rules for social security and

nonqualified plans• Cataloging fiduciary protection, QDRO

assurance, PBGC refuge, and bankruptcy protection


Transferable Skills

• Identify the contribution limit, salary deferral limit, and compensation cap

• Understanding death and disability benefits

• Spotting desirable investment vehicles

• Distinguishing the retirement security risks with nonqualified plans


The Role of the Retirement Planner

• Requires wide-ranging expertise• Involves many different tasks• Integrate retirement planning with

– Tax– Estate – Investment planning– Planning is more art than science– No average retiree– Never too early to late, but always different

because of a variety of goals, objectives, starting times and financial resources


Aspects of a Retirement Planning Practice

• Incorporate retirement planning with comprehensive financial planning

• Deal with other financial advisors with different expertise

• Deal with young clients• Monitor and update a client’s plan• Conduct seminars for employee groups• Network through organizations

– SFSP– FPA– NCOA– ASA– AARP


Steps in the Retirement Planning Process

• Establish client-planner relationships• Determine goals• Analyze and evaluate financial status• Develop and present the plan• Implement the plan• Monitor the plan


Critical Issues that Affect Retirement Planning

• Private Pension availability – better in medium and large companies

• Women and retirement—unique problems– Less likely to have a pension at work– Lower earnings higher turnover– Greater longevity– Caregivers– More likely to be widowed– Conservative investments


The Need for Education and Planners

• Seminar presentations increase 401(k) participation rates and contribution rates

• Over 50 percent cash out when they change jobs


Changing Face of Retirement

• Tax changes• Work• Caregiving


Baby Boomers

• 1946 – 1964 • Retirement is maturing with baby

boomers


• Spendthrift lifestyles• Unexpected expenses• Inadequate insurance coverage• Divorce (see QDRO)• Not covered under a company pension• Fail to roll over company pension• Lack of financial literacy• Diverting funds to other financial goals

Roadblocks to Retirement Saving


Retirement Objectives

• Maintain standard of living

• Maintain self-sufficiency

• Minimize taxes• Retire early• Pass on wealth

• Adapt to lifestyle change

• Improve lifestyle• Care for

dependents• Other


Retirement Ladder

Documents

Planning for Retirement Needs