Planning for your retirement can be a difficult task for many reasons. Perhaps you feel you have plenty of time to plan for the future. You may not feel that you have any money to spare right now. You may be confused about your options, and about how to determine your needs. While it's true there is a daunting amount of advice and information available on retirement planning, there are a few simple steps everyone can take to help make planning for retirement a little simpler.

One recommended step that you can take is to find a financial planner to help you plan your retirement. The last thing you want is the unpleasant surprise of realizing that your plan didn't meet your needs at the time of retirement. An expert can evaluate your current situation and help you set realistic goals for the future. Call your credit union to see if they offer financial planning services or can refer you to a financial planner.

Sound retirement planning requires realistic estimates of your financial needs and resources. Among the things you will need to consider are when and where you want to retire, your estimated expenses (such as housing, health care and leisure activities including travel), and the income you will need to meet these goals. A general rule of thumb is that individuals need 60% to 80% of their pre-retirement income to maintain their lifestyle in retirement.

You will also want to decide how much risk you are willing to bear as an investor. Conservative investors who don't want to risk losing any of the principle amount invested may feel more comfortable placing their retirement funds in more secure but lowering investments, such as certificates and savings accounts. Investors with greater tolerance for risk may choose to invest in stocks, mutual funds, or other investments which carry some risk of losing the principle invested.

Start Saving Now!

Before you do anything else, examine your budget and determine a sum that you can put into a savings account on a regular basis. You want to keep enough money to cover your bills, expenses, and emergencies, and you may have to pare down your spending somewhere. Your credit union may be able to help you determine how much to put aside, suggest ways to conserve your resources, and counsel you on the different account options available. If your credit union offers direct deposit via payroll deduction, take advantage of this as a way to make sure your savings deposit is made each pay period. Even if the amount is very small starting now is much better than waiting until you can afford more. Your savings account can serve as your retirement fund until you are ready to make more strategic investment plans, even if that takes several months or a year.

Individual Retirement Plans (IRAs)

In addition to a basic savings account, part of your retirement program can include an IRA. If you are not enrolled in an employer's retirement plan, you can deduct the first $2,000 contributed to your IRA each year from your gross income for tax purposes. You will pay taxes on the money as regular income when it is withdrawn, when you will likely be retired and perhaps in a lower tax bracket. With an IRA you can save your funds in a variety of different ways: basic savings account, certificates, mutual funds, etc. Saving just 38.46 a week will give you $2,000 each year for your IRS. You can arrange to make automatic contributions via direct deposit. Even if you are not eligible for the tax deduction, an IRA is a good method of putting money "out of the way" for the future, because an IRA is by nature a long-term investment-any funds withdrawn prior to age 591/2 are subject to heavy penalties.

Retirement and Pension Plans

Many employers in America offer their employees some form of retirement plan. The types of retirement plans available vary greatly-two common types are the 401(k) and profit sharing plans. According to the Wall Street Journal, benefits consultants say a good plan should give employees at least four options (a stock fund, a balanced fund of stocks and bonds, a money market fund, and a fixed account with investments such as guaranteed investment contracts).

One element of pension plans that you will want to verify is if your company's plan is a "defined-benefit" or "defined-contribution" plan. In the past, companies tended to offer "defined-benefit" plans, for which an employee's retirement income (the benefit) was stated in advance. In these cases, if the pension fund was coming up short, then the company would dig into its own pockets to make up the difference. Now, companies are more likely to offer plans that define only their contribution, for example, the company contributes fifty cents for every dollar contributed by the employee. With these plans, there is no guaranteed payment at retirement, and employees' returns are subject to the performance of the plan at the hands of the administrators.

Clearly, "defined-contribution" plans are far more risky for the consumer.

Many plans may come with steep fees and high sales costs. Check with your plan before investing, since these costs can seriously erode your expected return.

Also, remember you may not have easy access to your money once it is invested in a retirement plan. Some plans may not allow you to obtain the funds unless you leave the company or demonstrate extreme financial hardship. In addition, you may have to pay taxes and other heavy penalties.

Contact a Financial Planner

Retirement planning, as noted earlier, is indeed an extremely complex topic, with almost as many options as there are retirees. Our Financial Planners are here to help you make the right decisions. That way, you can feel secure about the investment choices you make.