Retirement Planning

As you approach retirement, you will want to explore your options for a confident and independent lifestyle. And retirement planning is one such way.

At CFCU Wealth Management our seasoned advisors are ready to guide you through all of your options and help you find the best retirement plan for your situation.

Planning for retirement is the process of determining your retirement income goals and developing a strategy to help meet them. It involves saving, investing, and managing your money to provide a steady stream of income throughout your retirement years.

Having a solid financial plan for retirement can help you:

• Make the most of your money: You will know how much money you'll need to save, where to invest it and how to balance saving for retirement with other goals.
• Build a personalized strategy: Your financial plan will include strategies that make sense in light of your age, income, risk tolerance, and other factors.
• Create an action plan: You'll be able to set milestones and monitor your progress toward achieving your financial goals in retirement.

It's important to note that the laws and regulations surrounding retirement are different in every state. That's why it's important to work with a professional who is familiar with regulations in your state and can help you plan accordingly.

Retirement plans can be characterized into two broad categories: defined benefit plans and defined contribution plans.

Defined Benefit Pension Plans

In a defined benefit plan, the employer promises to make specific monthly payments to the employee at retirement. These payments are based on salary history, length of service, and age, and they continue until the employee's death. The employer manages the plan assets and bears the investment risk and responsibility for providing promised benefits.

Defined Contribution Pension Plans

Defined contribution plans include profit-sharing plans, 401(k) plans, money purchase pension plans, employee stock ownership plans (ESOPs), 403(b) annuity contracts or custodial accounts, and 457(b) deferred compensation plans; in general, all of these types of retirement savings vehicles share several tax advantages that encourage people to save for retirement.

How do I start planning for retirement?
Retirement is a big milestone in life, and it's never too early or too late to start planning for it. With the right guidance and discipline, you can set yourself up for a confident retirement. Here are the steps to get you started:

• Assess your retirement goals. When do you want to retire? How much will you need to live the lifestyle you want? What are your sources of income? How much can you save?
• Assess your current financial situation. What are your current sources of income? What are your current expenses? What's your current savings rate? Are you saving enough?
• Create a retirement plan with the help of a financial planner. An expert who helps you strategize and create a comprehensive plan for your retirement can also help reduce the chances that you'll outlive your money.
• Periodically review and update your plan for changes in circumstances or changes in financial markets.
  

What are the stages of retirement planning?
Retirement, like life itself, is a journey. It's not so much a destination as a series of phases you go through. There are different phases of retirement, and each is unique.

• Pre-Retirement: In this stage, which usually lasts about five years, you're getting ready for retirement. You're evaluating your assets and thinking about how much money you'll need when you retire. If your savings aren't where they need to be, this is the time to take action.
• Full Retirement: This is the actual stage of retirement, which can last anywhere from a few months to 20 or more years. Many people experience joy and relief during this stage as they embark on a new life chapter.
• Disenchantment: At some point in the second stage of retirement, most retirees begin to feel some disillusionment with their new lifestyle. They may feel bored, purposeless, or struggle with changes in their identity.
• Reorientation: Retirees who successfully navigate the third stage of retirement move into the fourth stage, where they reexamine their values and priorities and start over again in a way that feels more fulfilling to them.
• Stability: In the fifth stage of retirement planning, retirees should feel some relief. They've made it through the transition stage and are now able to embrace a new lifestyle or routine. They may even have found a sense of purpose, whether that's through work, volunteering, or another activity.

What is the most common retirement plan?
The most common retirement plan is a 401(k) plan. A 401(k) is a type of defined-contribution plan where employees can save and invest for their retirement on a pretax basis. Employers can choose to match contributions made by employees, but this is not required.