Retirement Planning Part 2

Estate planning
Concepts included on this site dealing with federal estate tax issues may not be the most acceptable or best solutions to your situation. You should consult your attorney for advice on your particular situation.

On June 7, 2001, the Economic Growth and Tax Relief Reconciliation Act was signed by President Bush, bringing many changes over the next decade. Effective January 1, 2002, federal estate taxes will be steadily reduced and eventually abolished in 2010. Without further congressional action, however, the law as it existed in 2001 comes back into effect for 2011 and thereafter.

Estate Planning involves developing a “plan” that will accomplish the goals and objectives of an estate owner while living and at death. These goals and objectives could include:

  • Providing cash payment of estate expenses including federal estate tax.
  • Providing income to family members after the estate owner’s death.
  • Providing for the disposition of a business at death.
  • Distributing assets to family members and other heirs with the least amount of shrinkage possible.

It is an ongoing process that involves the creation, conservation, and distribution of property. The “plan” could be as simple as having a will or could require the use of life insurance, trusts, business continuation plans, or charitable arrangements.

The components of an individual retirement plan
You will have three potential income sources in retirement.

  • Social Security
  • Employer-sponsored retirement plans
  • Personal savings

Which of these sources of income will you count on during your retirement?

How much money you will have at retirement is determined by how much you save, how long you save it and the rate of return you receive.

It’s a good idea to start thinking now about where your retirement income might come from. Knowing where you are will help you plan accordingly for a comfortable retirement. Contact your financial representative to help you develop your personal retirement plan.

Finding solutions for your retirement gap
To get a more accurate idea of what your gap in retirement funds may be, talk with your financial representative as soon as possible. They will help you:

  • Verify your actual Social Security benefits from the Social Security Administration.
  • Estimate what your present retirement funding vehicles will be worth at retirement, assuming various rates of interest.
  • Develop a computerized retirement analysis, employing inflation factors and other sophisticated calculations to help forecast your estimated retirement income needs.
  • Set up a plan designed to achieve your retirement goals within your current means.
  • Update your retirement plan annually to reflect any changes in your objectives or present situation.

Remember: The quality of your retirement tomorrow will depend on the quality of your planning today.