Retirement Plan Accounts
For many, a comfortable retirement income depends on the size of their retirement plans and accounts more than on Social Security or any other resource.

Company Plans
There are a wide range of plans available. Employers have many choices in setting up and sponsoring retirement plans and accounts for their employees. Some plans provide a fixed percentage of salary (for example, 35%) as a retirement benefit for life. Others allow employees to accumulate assets in a retirement fund but without any guarantee as to the percentage of salary that the fund will replace.

Plans are funded in diverse ways, too. Some call for only employer contributions, some allow only employee contributions, and others have a mix of the two.

Contribution terms also can vary. For example, although contributions by employees and their earnings belong to the employee, employer contributions may be handled differently. Some plans provide that employer contributions and the related earnings totally vest (belong to the employee) in seven years. Other plans have faster vesting schedules.

Although companies are not required to have retirement plans, there are advantages to setting them up, including reduced taxes for the employer, increased incentives for employees to join and stay with a company, and opportunities to attain financial security.

Self-Employed Plans
Self-employed people can establish retirement plans as well. And self-employed owners with employees can benefit from offering retirement plans just like other companies do.

Individual Retirement Accounts
Some retirement accounts are set up by an individual and not by an employer. The two most common types are the traditional IRA and the Roth IRA. In both cases, it is up to an individual to set up an account and make contributions. IRAs have significant tax benefits so much so that many people participate in an employer-sponsored retirement plan and have IRAs, as well.

Other Investments
Retirement income can also come from personal, non-retirement investments, including stocks, bonds, mutual funds, savings accounts, CDs, real estate, businesses, annuities and almost anything else you can imagine.

When choosing personal investments to use for retirement, consider these factors:

• The potential growth in value
• How long you’ll own the investment
• The yearly cost of maintaining the investment until retirement
• The potential income flow from the investment during retirement
• How easy it is to turn the investment into cash (liquidity) when you need it
• Costs involved in converting it into cash (such as sales commissions and closing costs on real estate)
• How much risk there is with the investment
• The tax benefits/costs involved with owning and selling the investment

Your plan for your retirement fund may call for a significant personal investment component in addition to retirement plans and accounts.

Working During Retirement
Although it may seem like a contradiction to talk about working during “retirement,” for some it will be a necessity to make ends meet. This may mean working part-time or full-time as an employee, or running your own business.

But even if you don’t need additional money you may continue to work. For many, work contributes self-worth and self-esteem. Not working, without replacing it with something equally satisfying, can affect your mental sharpness, your health and, for some, even your sense of purpose.

If continuing to work looks like it’s going to part of your retirement, plan for it. If you have a hobby or special interest that you could turn into a viable business, investigate it. Advance research will improve your chances of success both in business and as a retiree.

A Final Word
It’s always nicer if working during retirement is a choice instead of a necessity. Plan for retirement now so you’ll have sufficient income during your golden years. Between now and then, be aware of how your investments are performing and whether you’re on track to meet your goals. And learn about the income tax and estate tax consequences and benefits available to you.

Chances are you’ll need to rely on at least two of the four sources of retirement income to have a comfortable retirement.

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Charles M. Bloom, Registered Principal offers securities and advisory services through Centaurus Financial, Inc. - Member FINRA and SIPC - 775 Avenida Pequena, CA, 93111 (mailing address: 3905 State Street Suite 7173, Santa Barbara, CA, 93105) - CA Life Insurance License No. 0A52786 - Centaurus Financial, Inc. and Shoreline Wealth & Investment Management are not affiliated companies.

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