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Financial Center for Women

Introduction to Retirement Planning

Introduction to Retirement Planning

What is retirement planning?

Whether you’re looking forward to retirement as an eagerly anticipated event, an opportunity to enjoy things like travel, hobbies and more family time or if the word retirement conjures up feeling of fear or dread because of the compounding anxiety about finances, you can benefit from the analysis of retirement planning today to prepare for your financial future, establish goals and make wise choices today.

The basic elements of retirement planning involve an analysis of your future economic circumstances, your retirement goals, the amount of income you’ll need, the resources necessary and contingency planning for circumstances that may impact your success.  This analysis will help you make wise choices now about income, saving, investments and retirement plans. Whether you are financially comfortable or are of limited means, however, retirement planning is possible and can help you take control of your own future.

Your retirement plan should be tailored to your unique situation including special planning considerations depending if you’ve worked as an employee, are a highly compensated executive or own a business. All plans should include an analysis of your retirement income need, the Social Security benefits available to you, anticipate your retirement health care needs including Medicare, supplemental coverage and long-term care needs and consider the survivor benefits for couples.

How can you determine your retirement income needs?

The first step to determine your retirement income needs, is to evaluate your present circumstances — your income, your expenses, your assets, and your debts. Next, you'll need to think about your future circumstances. There are four main sources for your retirement income: Social Security, pensions or other retirement vehicles, your investment portfolio, and savings. If you predict that your current resources will not provide you with your desired retirement lifestyle, there are certain steps you can take now to help change your circumstances.

You'll want to think about your future sources of income, but also about where you'll live. Will you continue to live in your current home, for instance, or will you move to a condominium or retirement community? And if your employer typically provides early retirement packages to its employees, you'll need to know how to evaluate such packages from a number of perspectives.

How do you save for retirement?

Learning how to save for retirement is imperative. There are a number of retirement vehicles available, including traditional and Roth IRAs, employer-sponsored retirement plans, nonqualified deferred compensation plans, stock plans, and annuities. Proper retirement planning requires an understanding of the workings of these tools.

Developing your personal investment plan can help you on the road toward your retirement goals. The sooner you start, the longer you'll have to accumulate funds for retirement.

It is important to understand the taxation of your retirement and investment vehicles. You'll want to compare the pros and cons of investing within a tax-deferred retirement savings plan versus a taxable brokerage account, and perhaps a Roth IRA versus a traditional IRA.

Finally, you may want to learn strategies for handling the competing demands of educating your children and retiring.

What should you know about distributions from IRAs and other retirement plans?

Effective retirement planning involves not only an awareness of the types of savings vehicles available, but also an understanding of taking distributions. In particular, you should be familiar with the tax ramifications of distributions (including a possible 10% premature distribution penalty tax for distributions made prior to age 59 ½). You may be interested in knowing whether you can borrow money from your retirement plan, whether it is better to receive your retirement money in one lump sum or in monthly checks, and whether you can roll your retirement plan balance into an IRA.

In addition, you may be concerned about naming one or more beneficiaries for your IRA or employer-sponsored retirement plan. It is important to understand the tax implications of distributions including  the impact of required minimum distributions after you reach age 72 (or 70½ if you reached that age prior to January 1, 2020).

What if you are an executive or business owner?

A number of additional retirement planning tools are often available for executives, such as nonqualified deferred compensation plans offered by employers to their key employees. If you're an executive, you should realize that nonqualified plans and stock plans can be valuable tools for retirement planning. You should understand the mechanics of the special benefits afforded by your employer, including the tax implications.

If you are a business owner, you have some special retirement planning concerns of your own. Specifically, you will want to plan for the succession of your business to family members or evaluate the necessity of a successful sale transaction of your business to achieve your retirement goals. You may also want to know which retirement plans are best suited to your business both for your employees and to prepare for your own eventual retirement.

How do Social Security and other government benefits programs impact retirement planning?

If you're planning for retirement, you should also consider the Social Security income (if any) you'll receive in the future. In fact, it is possible for you to estimate your Social Security benefits ahead of time. You should check your Social Security record periodically to ensure that you have met the eligibility requirements and that your information is accurate and complete.  Since the Social Security Administration has reduced the ages at which they mail you a statement, you can access this information by creating an account at and downloading your record.

You'll also want to become familiar with ways to optimize your Social Security benefits and minimize taxation. The timing of receipt of your benefits can be important, as can the impact of post-retirement employment. Other governmental programs should also be considered when planning for retirement.

In particular, you should review the topics of Medicare and Medicaid. You should know what Medicare does and does not cover, and what additional health care options are available to you including gap policies and Medicare Advantage Plans.  Medicaid planning can be particularly important for people of modest means. You should know the Medicaid eligibility requirements, the penalties for transferring assets inappropriately, and the various strategies available for protecting assets. In addition, you should become familiar with the specific methods of protecting your personal residence and the extent to which your state can impose liens on your property and pursue recovery remedies after your death. If you are planning for your post-retirement years, you should also gain some familiarity with long-term care insurance, nursing homes, retirement communities, assisted living, and other housing options for seniors.

Do government employees have special retirement concerns?

If you work for the federal government, a state government, a railroad, or if you are in the military, your retirement benefits may be subject to special rules. You should know how your retirement plan works, what distribution rules apply, how your survivors can benefit, how your plan may be integrated with Social Security, and what tax rules apply.

Seek the help of qualified professionals

If the task of creating and analyzing all of the factors that go into creating a retirement plan seem daunting on your own, seek out the help of qualified professionals.  At the Financial Center for Women, we work with our clients to create a customized approach to reaching their retirement goals.  We are retirement income specialists and can help create your strategy to optimize your retirement savings, Social Security and other income resources while minimizing taxes.  We work with you to help protect against retirement risks including inflation, market volatility and changes in circumstances.  So whether retirement is just around the corner or you have several years ahead to prepare, it’s important to start now to relieve anxiety and look forward to your successful retirement.


Lincoln Financial Advisors Corp. and its representatives do not provide legal or tax advice.  You may want to consult a legal or tax advisor regarding any legal or tax information as it relates to your personal circumstances.