Retirement Planning

Are you prepared for retirement?


Retirement planning is the process of developing a realistic approach to adequately funding one’s retirement. The process can be somewhat complex due to the numerous issues and variables involved.

A broad range of investment, tax1 and other retirement strategies can be utilized. In addition, there are a variety of modeling techniques for assessing the possibility of failure or success of those various strategies.

Determining Retirement Income Needs

The first task is to determine what income you will need in retirement. There are several approaches, such as percentage of current income, income and expense analysis etc. that may be used. Which approach suits you best? When will the income be needed and for how long? How should you account for inflation? Are there fluctuations in income that need to be considered?

Sources of Retirement Income

Next, you will need to assess what sources are currently expected to fund your retirement. What sources, such as Social Security, a company or government pension, a company-sponsored or business retirement plan such as a 401(k) plan, a SEP, SIMPLE IRA, 403(b) plan, 457(b) plan, IRA, Annuities etc., will provide your retirement income? What are the future estimates of income provided by these sources? When will the income begin? Will any of the sources be depleted by emergencies and other financial objectives along the way?

Determining the Surplus or Shortfall

Based on the assumptions made in your analysis of required retirement income and income sources, you will need to determine if your current planning will adequately fund your retirement or if you are likely to face a shortfall. How did you determine your life expectancy? Have you appropriately accounted for various phases of your retirement?

Strategies to Reduce Estimated Shortfall

If there is expected to be a shortfall in your retirement income, you will need to consider your options to address the shortfall. Can you increase your contributions to your employer-sponsored retirement plans? Can you open and fund an IRA? Do you need to utilize other possible options to save for retirement, such as other investments (e.g., equities, mutual funds2), annuities and/or life insurance? Which of these options are appropriate for you and how might you integrate solutions for retirements with other goals such as legacy and estate planning?

Monitoring and Updating Plans

Monitoring progress towards the achievement of retirement goals on a regular basis is an important step in the retirement planning process. Changes can occur to your current income, your needs and the underlying assumptions in your analysis. As retirement approaches, the actual amount(s) of retirement income can be more easily determined. For example, the Social Security benefit can be ascertained, a defined benefit pension plan payment can be obtained from the employer and the benefit calculation can be verified and actual retirement account values (e.g., 401(k) plans, IRAs, etc.) can be determined. You will need to monitor your plan and based on the changes to certain factors, your retirement plan will need to be updated.

In my experience the answer to achieving the best outcomes is methodical planning. Retirement plans are often in place for several decades. An experienced Financial Adviser who is committed to a detailed analysis of your needs and sources and is willing to explain the thinking behind each recommendation, will help you better understand why a particular course is best for you.     


1Neither New York Life Insurance Company nor its agents or affiliates provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.

2Securities offered through NYLIFE Securities LLC, member FINRA/SIPC.



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