Retirement Planning For 20-Somethings: Goal Setting

The example provided above is an over-simplistic view of a retirement analysis. A realistic retirement analysis would take more factors into consideration so as to ensure that any projections are as realistic as reasonably possible. The following are some of the factors that are usually included in a comprehensive retirement analysis:

• Your current age
• Your planned age of retirement
• Your current and projected income
• Your current and projected expenses
• Your current income tax rate and future income tax rate
• The amount you can afford to add to your retirement nest egg now and for the rest of your income earning years
• An assumed rate of return
• Projected inflation
• The various sources from which you might receive retirement income and whether those amounts would be fixed or varying
• Your planned retirement lifestyle, including where you plan to live during retirement
• The types of saving accounts and the tax status of those accounts
• Your health history and that of your family, so as to determine your need for health insurance and the different types of health-related coverage that you may need

While a comprehensive retirement analysis can provide a realistic assessment, there is no guarantee that the projected amounts will be sufficient to adequately finance your retirement. However, the earlier you start, the more likely that you will be on track with meeting your goals and objectives. If you start late and find that you are behind, making changes may require too much sacrifice to the point of adversely affecting your pre-retirement and retirement lifestyle.