Determining Your Retirement Resources

If you have taken the time to determine what your needs for income in retirement will be, the next step in retirement planning will be to add up the resources you expect to have from your current saving and investment.

Start by determining the income that will be provided by your current sources of retirement income: your pension plan and any employer-sponsored savings and investment plans you may participate in at work; any individual retirement accounts (IRAs) you have established; other investments and annuities; your savings accounts; and, of course, the value of your home and other property.

What about Social Security? You might plan based on current benefit levels, but remember that the longer you postpone taking Social Security benefits, the more benefits you can receive until your full retirement age. If you are in your 20s, 30s, or 40s, it may be best not to include Social Security benefits in your planning at all.

Next, you will need to convert all your sources of retirement income into an annual income stream and make an estimated adjustment for inflation. When you subtract your estimated annual income from your estimated needs, you will know where you stand.

If you are like many people, there is probably a gap between where you would like to be at retirement and where your current rate of saving and investing will bring you. The next step in retirement planning, then, is to determine what you will do about the shortfall.

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