Guide to Retirement Planning

Guide to Retirement Planning

Most people look forward to the day they can retire and begin to live without being tied to their job. While retirement is something everyone looks forward to, many do not adequately plan for it. Financial planning is essential to ensuring that you are able to live the lifestyle you envision during retirement. This guide will help you learn some of the most important items to consider as you prepare for retirement. While this guide is intended to be helpful and introduce you to the options available, you should seek the advice of a financial planner to make sure that you have a plan that will allow you to reach a healthy retirement.

Start Retirement Planning Early

It is best to begin preparing for retirement as early as possible. Individuals in their 20’s or 30’s should start saving as much as they can afford. If you are older, you can still plan for your golden years. This guide includes different strategies for different needs.

Calculating Your Retirement Needs

One of the hardest parts of retirement planning is calculating how much money you will need after you retire. There are many factors that you should consider when you determine your upcoming needs which include:

  • Current age
  • Estimated retirement age
  • Estimated living expenses
  • Life expectancy
  • Health
  • Location
  • Salary
  • Current savings and savings rate
  • Social Security impact
  • Partner/spouse assets/income

While you will never know for certain what your retirement needs will be, you can use this information to make an educated estimate. Online retirement calculation tools and forms can be helpful. You can use a calculator like this one located at You can also estimate your yearly expenses by creating a simple budget. Determine your anticipated monthly expenses and multiply by 12 to get a yearly figure. Don’t forget to adjust your numbers in the future for inflation and increases to the cost of living.

Review Your Finances

Complete a thorough review of your current finances. Look at your assets, debts, and investments. Take note of when your major debt obligations will end, especially the mortgage on your home. One of the important steps in preparing for retirement is to get rid of as much debt as possible.

  • Take steps to pay off your mortgage
  • Pay off credit cards
  • Reduce interest rates on debts

Check your credit report to ensure its accuracy. If there are inaccuracies on your report, this could cause your credit score to be low. A low credit score will prevent you from getting the best interest rates and credit opportunities. Whenever possible, plan to enter your retirement years with little to no debt.

Social Security

Once you retire, you may be eligible to receive social security retirement benefits. These payments should generally be considered as a supplement to your other types of retirement funds, as it most likely will not provide enough income to support your lifestyle. In order to receive social security benefits, you must earn 40 credits, or work 10 years, to qualify. The amount you are entitled to receive depends on several factors, including the amount you earned over the course of your working years and the age you choose to begin receiving benefits. For most people, the “full retirement age” is somewhere between 66 and 67 years of age. However, you can retire as early as age 62 and receive a smaller percentage of the maximum you would have received at your full retirement age. Each year you postpone receiving social security retirement payments (from age 62 up to your full retirement age), the more you will receive monthly.  Once you reach full retirement age, you can delay payments up to the age of 70 and receive approximately 8% more for each year you delay payments beyond full retirement.

To learn more about social security retirement payments, you can go to, or read the brochure online located at

Consider Your Investments

Some people have pension or retirement accounts through work, but many do not. Even those that do have a pension may find that the payouts they receive will not be enough alone to support their financial needs. Investments are a good way to provide retirement income. A good retirement savings plan includes a variety of investments. This ensures a good outcome even if one of your investments does not pan out as expected.


A 401(k) is a retirement savings account through an employer. A 401(k) plans provide a tax deferred method for savings. In addition to tax benefits, another benefit of a 401(k) is that employers may contribute to the plan by adding up to 50 cents for every dollar of the employee’s investment. Please keep in mind, your employer will not match your elective deferrals in excess of 6% of your compensation each plan year. The total matching contribution made on your behalf will not exceed $1,200 per each plan year. Funds that you contribute to a 401(k) account are deducted from your paycheck before they are taxed, therefore reducing your taxable income. When you reach retirement age, the money you withdraw is then taxable, but likely at a lesser rate than when you were working full-time. Withdrawals can begin at age 59 ½ without any penalty. There are certain situations that your 401(k) plan may allow for withdrawals before 59 ½, such as medical expenses, funeral expenses, college tuition or to save your home from foreclosure, but you must check with your plan administrator to verify these exceptions.  If you withdraw money prior to 59 ½ for any other reason, you will have to pay an additional 10% tax penalty on the amount of the withdrawal.

Within the 401(k) there may be stocks, bonds, mutual funds, and target date funds based on your expected retirement date. Putting some of your money into stocks or bonds is a way to diversify your investment portfolio. Stocks are among the riskiest of all investments, so be careful about putting all of your assets into this option. A financial advisor can assist you in determining what percentage of your retirement plan should include stocks, bonds, and other investments.


An IRA, Individual Retirement Account, is basically a savings account that provides you with tax breaks because you don’t intend to touch it until retirement. There are two types of IRA’s; a traditional IRA and a Roth IRA. The biggest difference between the two is that you pay income taxes on the withdrawals you make from a traditional IRA when you are retired, and you do not pay income taxes on withdrawals from a Roth IRA. You also may qualify for a tax deduction on your income taxes with a traditional IRA, but not a Roth IRA. You can find out more about IRAs, their restrictions and their potential tax benefits on the IRS (Internal Revenue Service) website.

You can open an IRA at most banks and brokerage firms. As of 2016, you are allowed to contribute up to $5,500 per year, or $6,500 per year if you are 50 years old or more. Depending upon your income level, you may be able to deduct your contribution to a traditional IRA on your income tax return. You are not supposed to make any withdrawals from this type of account until you are 59 ½ years old. If you do, you will have to pay 10% additional tax on the amount of the withdrawal.  The funds in your IRA

earn interest or gain value from dividends or capital gains (depending on how the funds are invested), and that additional growth is tax free until withdrawn.

Real Estate

Investing in real estate is another option to consider when planning for retirement. Real estate, particularly rental property, can offer you significant tax breaks, while also providing you with a monthly income. It is important to choose wisely and make certain that you have enough money to pay for taxes, maintenance, and upkeep of the property. Investment property can be a risky option because of the fluctuation of the housing market. If you are considering a real estate investment, discuss your options with a qualified financial advisor.

Traditional Savings

A traditional savings account is a safe and secure way to protect your money. One of the most important advantages of a savings account is that you have immediate access to your funds. This can be extremely important should an emergency situation arise.

Medical Needs

Your medical needs will typically increase as you age. Medicare becomes available to cover at least a portion of your immediate medical needs once you are age 65. However, you may need more. Consider taking out a supplemental medical policy to cover the gap that Medicare does not pay. Remember that even a short hospital stay can be very expensive and may end up wiping out your entire savings account in just a few days. There are many supplemental insurance plans available. To learn more about how Medicare works, you can visit

Long-term care insurance can protect your assets and savings. This type of insurance will pay for medical expenses if you need to stay in a care facility because of a serious illness, such as cancer. Long-term care facilities can be expensive and most, if not all of the costs, are not covered through work sponsored health insurance.  A good long-term care policy will likely cover home care, assisted living, nursing home care, respite care and adult day care. Each policy is different, so review the provisions to make sure you are getting coverage for what is most important to you.

Choosing Where to Live

As you review your retirement options, you will need to think about where you plan to live. Many retirees prefer to move to a new location, often in a warm climate. It’s also possible that your current home may be too large now that your family is grown and out of the house. A condo or townhome could be a better option because of its size, as well as the reduced need for maintenance and chores. Selling your home and downsizing is a way to save additional funds and help you finance your retirement.

Reverse Mortgage

Those who are approaching retirement without the benefit of a solid retirement plan may need to consider other alternatives. One way to get the money you need is by taking out a reverse mortgage. A reverse mortgage allows you to take money out of your home via monthly payments that are funded by the equity in your home. Instead of making mortgage payments, you will be receiving money that you can use for your retirement. You can even remain in your home after taking out a reverse mortgage. Reverse mortgages have various costs associated with it, and should be considered after receiving financial advice and counseling, as this is not always the best option available. You can review more information regarding reverse mortgages online at

Make a Retirement Plan

Those who create a detailed retirement plan are much more likely to meet their financial needs after they retire. It is necessary to be realistic about your needs as well as how much money you will have available from various sources. Many people underestimate how much it will cost them to live during their retirement years. As you develop your retirement plan, it helps to maintain a folder that includes all of your retirement records, including pensions, investments, savings, and medical data.

Planning for retirement can be complex as there are many options to consider. One of the best ways to create a retirement plan that will work for you is to seek assistance from a reputable financial planner who specializes in retirement planning and look at your specific needs and goals.

DISCLAIMER: This guide is provided only for informational purposes and is not intended to be a substitute for legal or other professional advice. This guide does not contain nor is it intended to provide legal or other professional advice for any specific situation and readers should not take action or refrain from taking action, based only on the information provided in this guide. Goldberg & Osborne has attempted to provide accurate and current information in this guide, but cannot and does not guarantee that the information is accurate, complete, or up to date. This guide may contain links and/or search terms that will lead to external websites as a convenience to the reader, but Goldberg & Osborne is not responsible for the content or operation of any website other than its own website. The presence of a link or a search term does not imply and is not an endorsement by Goldberg & Osborne of the website provider or the information contained on any linked website or on any website contained in search results from a search term provided in the guide.