Retirement and College Savings Plans
People belonging to the largest generation in history, the so-called Baby Boomers, have finally begun to reach 59.5 in 2005. Over the next 18 years, 78 million people will reach this age. Why is turning 59.5 so important if the majority of people don't retire until they are 65 or older? This age marks a life milestone, when individuals may begin to take distributions from several types of retirement accounts without penalty.

One of the primary goals for investors is to save enough money for their retirement years. What if they haven't saved enough by age 62, 63, 64, 65? How do they know if the amount they have saved will carry them through their so-called golden years, especially if they begin withdrawals at age 59.5?

There are a number of factors for your clients to consider when planning for a worry-free retirement. For instance, a person who retires today at the age of 62 will need to save enough money to pay expenses, support lifestyle expectations, perhaps build an estate to leave behind, for 25 to 30 years! At the same time, a dollar today will be worth about $.42 when that same 62 year old turns 92. So, not only are people in the U.S. living longer, requiring them to save additional money for those extra years, but they also need to plan ahead for the eroding effect inflation will have on their purchasing power over time.

The government has created a number of retirement plans to help U.S. citizens achieve their retirement goals and to lessen the impact of inflation on their assets. In this section, we explore several tax-deductible and tax-deferred retirement plans and accounts and their role in developing retirement strategies for your future clients.

Paying for college has also become an increasingly worrisome prospect for many families in the U.S. While inflation erodes retirement savings at roughly 2-4% per year, the cost of a four-year undergraduate college program has been rising steadily at a rate of 5-6% or more per year. Congress has also recognized the need for college savings plans that alleviate at least some of the costs associated with college savings while providing methods and incentives to help families save for future higher education costs. The last portion of this section is devoted to these new college savings plans.

Employee Sponsored Retirement Plans

Related Articles
  1. Financial Advisor

    Parents: Avoid This Retirement Savings Mistake

    Parents should make saving for their own retirement a priority over helping with their children’s college costs.
  2. Financial Advisor

    Which Gets Priority: Retirement or College Fund?

    On a tight budget? Wondering which to contribute to – your retirement or your kid's college fund? Here's expert help on how best to allocate your savings.
  3. Retirement

    9 Factors That Affect When You Retire

    Are you headed to an early retirement, or will you be working into your golden years?
  4. Financial Advisor

    Should Parents Save Towards College or Retirement?

    Many parents are unsure about whether to save more for retirement or education for their kids. These general guidelines that may make that decision easier.
  5. Retirement

    Why You Need to Budget and Self-Fund Retirement

    Make retirement savings a priority because costs are rising and Social Security won't be enough.
  6. Retirement

    How to Catch Up on Retirement Savings

    Lots of people nearing retirement don't have enough saved. Thankfully there is a host of ways to catch-up on saving, from working longer to saving more.
  7. Retirement

    Retirement: What Percentage of Salary to Save?

    Researchers have looked at the percentage of salary you should save to ensure you end up with enough for a comfortable retirement. See how you measure up.
  8. Financial Advisor

    Retirement Savings Strategies for Clients in Their 40s

    Here are five ways 40-somethings can plan ahead for retirement.
  9. Retirement

    Retirement Savings Tips For 35- To 44-Year-Olds

    Learn how the "sandwich generation" can save for retirement while taking care of their kids and parents.
  10. Retirement

    How Much To Save To Retire By 50

    Depending on how much you make, when you have to start and what percentage you need, how much do you need to save each paycheck to have $50, 000 a year after 50?
Frequently Asked Questions
  1. What's the Best Way to Contact Warren Buffett?

    Learn how to contact Warren Buffett and what kinds of contact is most likely to receive a response from him or from his company, ...
  2. What is the Financial Services Sector?

    A diverse group of companies, beyond banks and credit unions, comprises the financial services sector.
  3. Who are Whole Foods' (WFM) main competitors?

    Whole Foods' main competitors are Sprouts Farmers Markets and Trader Joe's. However, the recent acquisition by Amazon my ...
  4. What caused the Stock Market Crash of 1929 that preceded the Great Depression?

    Find out what led to the stock market crash of 1929, which in turn led to the Great Depression. It sparked a nearly 90% loss ...
Trading Center