Retirement and College Savings Plans - Introduction

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. Investing Basics

    How To Handle A Serious Dispute With Your Broker

    Find out what to do if you have a dispute with your broker.
  2. Professionals

    Hedge Funds and the Law

    Learn how hedge funds have gotten in trouble for illegal insider trading. Read about questionable high-frequency trading (HFT) strategies.
  3. Professionals

    Career Advice: Financial Analyst Vs. Investment Banker

    Read an in-depth comparison about working as a Financial Analyst vs. working as an Investment Banker, two highly prestigious business careers.
  4. Professionals

    Who Needs to Take the Series 65?

    Most states require individuals to pass the Series 65 exam in order to act as investment advisors.
  5. Investing Basics

    How to Vet Financial Advisors Via BrokerCheck

    Many people research restaurants or movies, but few select brokers or financial advisors with much research. Here's how BrokerCheck can help.
  6. Professionals

    Career Advice: Financial Planner Vs. Stockbroker

    Read an in-depth review of a career as a financial planner as opposed to a career as a stockbroker, including how to decide which is best for you.
  7. Term

    Understanding the Maintenance Margin

    A maintenance margin is the minimum amount of equity that must be kept in a margin account.
  8. Investing Basics

    Brokers and RIAs: One and the Same?

    Brokers and registered investment advisors have some key differences. Here's what you need to know.
  9. Professionals

    Is a Google Robo-Advisor on the Horizon?

    It's possible that Google is looking to get into the robo-advisor business, either as a new venture or as a way to provide more benefits to employees.
  10. Professionals

    Understanding Series 6

    Upon successful completion of the Series 6, an individual will have the qualifications needed to sell open end mutual funds and variable annuities
  1. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin ...
  2. Series 6

    A securities license entitling the holder to register as a limited ...
  3. Comprehensive Automated Risk Data ...

    The Comprehensive Automated Risk Data System (CARDS) is an initiative ...
  4. Corporate Financing Committee

    A regulatory group that reviews documentation that is submitted ...
  5. Series 79

    A examination to ensure a candidate is qualified to become a ...
  6. Research Analyst

    A person who prepares investigative reports on equity securities. ...
  1. Are hedge funds regulated by FINRA?

    Alternative investment vehicles such as hedge funds offer investors a wider range of possibilities due to certain exceptions ... Read Full Answer >>
  2. How are variable annuities regulated?

    The sale of a variable annuity is regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory ... Read Full Answer >>
  3. Do financial advisors need to pass the Series 7 exam?

    The exact nature of a financial advisor's job responsibilities determines whether he must have a Series 7 license. If a financial ... Read Full Answer >>
  4. Is a financial advisor required to have a degree?

    Financial advisors are not required to have university degrees. However, they are required to pass certain exams administered ... Read Full Answer >>
  5. Do financial advisors need to be approved by FINRA?

    The term "financial advisor" can refer to a couple of different roles. It most often refers to a broker-dealer or an investment ... Read Full Answer >>
  6. How does a broker decide which customers are eligible to open a margin account?

    Brokers have the sole discretion to determine which customers may open margin accounts with them, although there are regulations ... Read Full Answer >>
Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center