Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Neither Udell Associates nor Pendragon Financial Services are affiliated with Kestra IS or Kestra AS. This site is published for residents of the United States only. Registered Representatives of Kestra Investment Services, LLC and Investment Advisor Representatives of Kestra Advisory Services, LLC, may only conduct business with Imageresidents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact our Compliance department at 512-697-6000.

retirement planning

chairsRetirement planning is a term that refers to the allocation of financial resources towards retirement. In many cases this means setting aside assets or other similar resources for the purposes of receiving a living income once you're a certain age. Financial independence is the objective of retirement planning. Many people hope to be able to survive without working at all, so that they can just spend time with family, or travel. Getting to this point takes some time and a lot of attention to detail throughout the years. Getting ready to retire is a process that ideally starts as early as possible in ones career. Allowing investments more time to earn can be a good way to build your portfolios.

Are you ready to retire?

The process of putting together plans to retire involves two basic parts. The first part is assessing your readiness to retire given the lifestyle goals you have and the age at which you hope to retire. The second is to come up with possible actions and decisions to improve your readiness and to get closer to your goals. Every action you take as an investor are in relation to this repetitive process. Ideally, you are always evaluating how ready you are for retirement and how well your plans are proceeding. And making adjustments to these plans and changing the course of your strategy are normal parts of the planning process.

Retirement planning is not something that can be done in a day, a week, or even a month. It is not an event but rather a repetitive and cyclical process. The best plans are the ones that provide enough flexibility to allow you to make changes as needed.

To achieve this kind of flexibility and to come out with the best series of investments to help you achieve your goals, it is recommended to work with a retirement planner to make the process simpler and to help expose you to ideas and investments you might not be aware of. Retirement planning can be a difficult and sometimes mysterious process, but a professional planner can make the process simpler.

Investors who want to reach their retirement goals need to start investing as early as they can. Getting into the market early gives your investments more time to perform and to earn an income. Establishing a consistent pattern early on also helps build up your portfolio so that it can better withstand downturns in the market. A long term and consistent investment pattern means the investor does not have to rely on luck as much in order to reach their financial goals.

Setting Attainable Goals for Retirement

Investors who want to live comfortably when they are through working need to set reachable goals that are based on the lifestyle they wish to have, not on someone else's benchmark. After all, it is your life and no one else's. Be honest about the way you hope to live and determine how much the lifestyle you desire will cost you. Work backwards from there to calculate how much you'll need to save in order to supplement Social Security and any other income you might have coming to you.

One key aspect of retirement planning is choosing the investment techniques you will use to help you reach your financial goals. There are many different kinds of investments available and different opportunities will appeal to different people. But 401k accounts are a great way to put money away for retirement. A 401k is an option that should appeal to just about anyone. Making contributions to these funds results in immediate and long term tax benefits. The contributions themselves are deducted from your taxable income, and the growth on the account is tax deferred until withdrawal. Plus many of these accounts feature matching company contributions.

Individual retirement accounts also offer tax advantages for people planning to retire down the road. A traditional IRA features tax deferred growth, meaning that investors pay income taxes on their gains upon withdrawal. A Roth IRA is different in that it does not allow for deductible contributions, but once contributions are in the account they are no longer taxed even at withdrawal*. Good retirement planning involves choosing the best retirement techniques for the goals you have and your ability to invest. One rule of thumb: even if it is not your primary investment, take advantage of company matched IRAs and 401k accounts by contributing at least the minimum needed to capture that company match. This is free money, and free money is pretty hard to turn down when we're planning for a retirement that will probably cost more money than we'd like to admit.

*Distributions may be subject to taxes if certain requirements or exceptions are not met. Please consult with your advisor.

Asset Allocation Focus

We believe healthy retirement planning depends on asset allocation rather than on the performance of one single investment. For this reason, it is good to spread your investment capital around. Of course, investors should not get into financial investments just for the sake of diversification unless they understand the income and growth objectives of the investments and are confident in their prospects for future performance. This part of retirement planning quite often requires the help of a professional. Many of you are not experts in retirement planning. But even if you do get some help from an expert, it does not mean that you have to surrender control over your portfolio. Individuals can work out their own agreements with financial planners as far as portfolio control is concerned. But it can pay to get help with planning.

Strategic Financial Planning

Strategic planning will yield a comprehensive strategy for systematic and disciplined contribution to funds designed for income, growth, and limited risk exposure. A professional can help you design a suitable portfolio given your particular goals. Retirement planning is not simple, but with some work this planning may be done effectively and with success.

An example of financial planning after an investor has retired is the strategy to withdraw from taxable accounts first in order to let tax sheltered funds grow unimpeded for as long as they can. Retirement planning in its essence is an effort to get more mileage out of the money we have to invest, both on the way in and at withdrawal when we retire.

Retirement planning is a whole life strategy that involves lifestyle choices in the present to help finance the future. As we get older the need for discipline in this area becomes more and more apparent. It's our thought that those among us who take retirement planning seriously while they are still young will most likely realize a long term advantage.

Contact us for more information regarding how we may help you with your retirement planning.

* Using asset allocation as part of your investment strategy neither assures nor guarantees better performance and cannot protect against loss of principal due to changing market conditions.

Securities and Investment Advisory Services offered through NFP Securities, Inc., member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Retirement Wealth Specialists or Udell Associates.
    NFP Securities, Inc. does not provide tax or legal advice. Any decisions whether to implement these ideas should be made by the client in consultation with professional financial, tax, and legal counsel.
    This site is published for residents of the United States only. Registered Representatives and Investment Advisor Representatives of NFPSI may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact the NFPSI Compliance Department at 512-697-6000.

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Three questions that help predict your retirement readiness

Individuals who have more financial knowledge have a greater likelihood of planning for retirement, according to a new National Bureau of Economic Research study. The telephone survey of 1,488 adults asked respondents three financial literacy questions and found that those with all correct answers are likely to be the most prepared for retirement.

1 Suppose you had $100 in a savings account and the interest rate was 2 percent per year. After 5 years, how much do you think you would have in the account if you left the money to grow?

a. More than $102
b. Exactly $102
c. Less than $102

2 Imagine that the interest rate on your savings account was 1 percent per year and inflation was 2 percent per year. After 1 year, how much would you be able to buy with the money in this account?

a. More than today
b. Exactly the same
c. Less than today

3  Please tell me whether this statement is true or false. “Buying a single company’s stock usually provides a safer return than a stock mutual fund.”

a. True
b. False

Scroll down for answers