Developing a Retirement Planning Strategy


858.521.7050 • munson@ubs.com


planning for retirement means far more than simply accumulating a nest egg for the years when you’re no longer working. it involves developing a long- term investment strategy that helps you address this critical goal without losing sight of your more immediate financial concerns, such as paying your mortgage or sending a child to college.


Where Will Your Retirement Nest Egg Come From? You will potentially need 70% to 80% (or even more) of your pre-retirement income to maintain your standard of living in your retirement years. Therefore, before you can formulate a cohesive retirement plan, you need to determine what your sources of income will be in retirement.


individual retirement accounts (“iras”) If you don’t have an IRA, you could be passing up a valuable opportunity to save for your retirement. Whether you choose a traditional IRA or a Roth IRA [1], the same basic tax-favored principle applies: savings in an IRA get the benefit of tax-deferred growth. As a result, an investment in an IRA allows you to potentially accumulate more assets than if you had invested the same dollars in a taxable account [2].


your company retirement plan


Past generations relied on company pension plans to take care of their retirement needs. While many companies still maintain defined benefit plans, many have switched to or added defined contribution plans, such as 401(k) plans. With a 401(k) plan, the responsibility is on you to contribute to the plan and determine how your savings will be invested.


One key advantage of 401(k) plans is that they offer tax- deferred savings. That means that you do not pay taxes on your contributions or on the earnings accumulating in the plan until you make a withdrawal. Consider making the highest allowable contribution to your employer-sponsored retirement plan.


If you are eligible to participate, you may generally contribute up to $16,500 this year, and $22,000 if you are age 50 or above depending upon the provisions of the plan and other limitations imposed by law. For example, 401(k) plans must meet non-discrimination tests, which can limit the amount that highly compensated employees may elect


By John kerr & douglas munson, uBs 858.521.7050 • douglas.munson@ubs.com


to defer from salary and receive as matching contributions based on the amounts that non-highly compensated employees can defer and receive.


your social security Benefits


These days, Social Security represents only a small portion of the income most retirees will need. According to a study done by the Employee Benefit Research Institute, individuals 65-years-old or older whose post-retirement annual income was at least $50,000 would generally derive only 14.3% of their retirement income from Social Security.


The Responsibility to Plan Is Yours


The majority of the income you’ll need in retirement will most likely come from you. That’s why it’s vital that you take the time now to develop an intelligent, practical retirement plan that can help you pursue your retirement income needs. A good way to start is to participate to the fullest extent possible in a 401(k) plan (if your company provides one) and make annual contributions to an IRA. Both give your money the potential to grow on a tax- deferred basis.


Professional Advice


There are many tools available to help you quantify your goals and implement your plans. By working with a professional financial advisor, he or she can help you develop a retirement plan that suits your particular goals and circumstances. Through education, patience and a disciplined approach to saving, you can pursue your long- term financial goals.


[1] Certain eligibility requirements apply with respect to making contributions to traditional and Roth IRAs; you should consult your tax advisor.


[2] All or a portion of the amount withdrawn from an IRA may be subject to ordinary income taxes. In addition, withdrawals may be subject to an additional 10% tax penalty for early distribution.


Neither UBS Financial Services Inc. nor its Financial Advisors provide tax or legal advice. You should consult an attorney or tax professional regarding your specific situation.


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