RETIREMENT PLANNING

Jim, aged 60, is a retired geologist. He has always been interested in his investments and has handled his own portfolio for a number of years. The introduction of on-line trading meant that Jim no longer had to deal with an Investment advisor and was able to use his own information and research to buy and sell stocks. Jim’s routine each day in his retirement is to be at his computer at 6:30AM each morning to catch the stock market opening. On the wall facing his desk are two televisions tuned to two different business networks. Jim will stay at his desk until 10 or 11AM each morning, reading information and trading his portfolio. When asked how he was enjoying his retirement, he will say “I’m not retired; I have become a professional investor.”

Not everyone is cut out to become an investment or money expert, nor do they need to be. In fact, many retirees use the pursuit of investment knowledge as a replacement for the jobs they retired from rather than to enhance the quality of their retirement life.

Retirement tends to be the part of life that most people look toward after their working days are over. This portion of your financial plan deals with the sources of income after you retire. We have provided projections assuming retirement at three different dates, identified by your ages. As you can see, the longer you work and the longer your funds can accumulate the more income that will be available.


RETIREMENT PLAN PROJECTIONS

In the Retirement Plan Projections, we have calculated the projected values using an estimated earnings percentage, assumed continuation of contributions and optional retirement dates.

The Retirement Income Summary portion provides six options for receiving your income at retirement. The interest only option shows an interest income earned on the net after-tax lump sum distribution. The two installment options show the annual income derived from removing the retirement plan value in 10 or 20 annual installments. The three annuity options - life only, life and 10 years certain and life and 20 years certain - state the annual income you can expect to receive, should you elect one of those options. The figure for life annuity with 20 years certain is a figure very similar to a joint and survivor annuity. Annuitization assumes maximum principal retention.


RETIREMENT INCOME ANALYSIS

The Retirement Income Analysis estimates all your sources of income upon retirement. Income tax is then calculated on that amount. Once your after-tax retirement income is calculated, it is then compared to your after-tax retirement income goal. To make the report even more realistic, your desired after-tax retirement income has been inflated to reflect your desired income in inflated dollars that provide the same purchasing power as today’s dollar.

The remainder of the report is an analysis of the capital you need to invest to attain the desired retirement income. The effect of inflation on future purchasing power has been calculated for you.

Retirement Tax Suggestions

Planning For Retirement