Asset Management*

Retirement Planning*

What Is Retirement Planning*?

Retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve those goals. Retirement planning* includes identifying sources of income, estimating expenses, implementing a savings program, and managing assets and risk. Future cash flows are estimated to determine if the retirement income goal will be achieved. Some retirement plans* change depending on whether you’re in, say, the United States, or Canada.

Retirement planning* is ideally a life-long process. You can start at any time, but it works best if you factor it into your financial planning from the beginning. That’s the best way to ensure a safe, secure—and fun—retirement. The fun part is why it makes sense to pay attention to the serious and perhaps boring part: planning how you’ll get there.

KEY TAKEAWAYS

• Retirement planning* refers to financial strategies of saving, investment, and ultimately distribution of money meant to sustain one’s self during retirement.
• Many popular investment vehicles such as IRAs and 401(k)s allow retirement savers to grow their money with certain tax advantages.
• Retirement planning* takes into account not only assets and income but also future expenses, liabilities, and life expectancy.
• It is never too early—or too late (although earlier is better)—to start retirement planning.

What Is the Difference Between a Traditional IRA and Roth IRA?

A traditional IRA is funded by pre-tax dollars, meaning you get an upfront deduction. You will owe income taxes in the year in which you make a withdrawal.

A Roth IRA is funded with after-tax dollars. Although you get no immediate tax benefit, your contribution and all of its earnings can be withdrawn in the future tax-free.

The Roth IRA also boasts more flexibility for withdrawals than a traditional IRA. You’ve already paid your income taxes due on the money, so it’s yours if you want it early.