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Marketplace Finance Planning for Retirement R etirement today has three phases, according to a study by the American Association of Retired Persons (AARP): pre-retirement, which occurs between the ages of 50 and 61, is the time to figure out what you want out of the next stages of life; early retirement, between the ages of 62 and 74, is when Social Security currently goes into effect – at least for some people; and older retirement, age 75 and above, is when failing health tends to be an issue. Although there are various terms for the different stages of retirement, by age 50 an increasing number of us have only lived half of our lives. With every advance in health care, these retirement phases are occurring later in life. Steven Covey teaches the importance of identifying one’s life work and then taking time to address that cause. He points out that we spend more time planning a wedding than plan- ning a marriage. A similar concept applies to retirement. We spend more time planning and managing our 30- to 40-year career than planning our 30 or 40 years of retirement. In some respects, retirement planning is a new concept. Earlier generations didn’t face this issue be- cause many people simply didn’t live long enough. The task of planning one’s own retirement can be daunting, and some people choose to avoid it altogether. To make sure you enjoy your retirement without financial concern, you should make sure you have saved enough money. Some of the factors to consider are: 1. What percentage of your pre-retirement income will you need? 2. When will you retire? 3. How many years do you think you will live? 4. What long-term rate of return do you expect to earn on investments? 5. Have you considered inflation? 6. What tax rate do you expect to pay during retirement? Taking these factors into consideration, you can calculate how much you’ll need for retire- ment. Take control of your retirement, just as you have your career. As further evidence of the changing nature of retirement, consider the findings of the Gallup Organization, which has conducted a survey over the past eight years asking what people expect from retirement. Gallup found that 60 percent of retirees want to become entrepreneurs or seek a new job to fulfill their dreams, 10 percent are seeking a new work-life balance, 15 percent hope to enjoy a traditional retirement, and the remaining 15 percent do not want to retire, ever. These retirees are proving that the second half of life is full of opportunity. Whatever the perfect retirement scenario is for you, make sure to plan so that it can be yours. Carol Ringrose Alexander, CFP ® , AIF ® is a financial advisor with Retirement Investment Advisors. By Carol Ringrose Alexander, CFP®, AIF® Carol Ringrose Alexander This article appeared in the April 2008 issue of NW Style magazine and is reproduced with permission from the publisher. ©2009 Southwestern Publishing
