Eventually, nearly everyone stops working for a living. Although the idea of retiring is relatively new in the history of humanity, it is a fact of life today. Retirement is also a dynamic concept, as many people are altering both their perception of retirement age and what retirement means. There are three basic sources for funding retirement (oftentimes referred to as the "three-legged stool" of retirement), and they are:
There can also be another leg of retirement income, and that is either a part-time or full-time job! What retirement should be is changing and evolving, and more individuals are working part-time or doing jobs they enjoy rather than simply retiring. Each situation is unique, and we should not have a stereotype for what retirement should be. Getting the gold watch and sitting on the front porch drinking lemonade, or golfing every day, is not necessarily everyone's retirement goal.
We will start the module by taking a look at some of the challenges and opportunities when planning for retirement. There are really two big pieces to retirement: preparing and saving for it, and then living it. We will take a look at sources of retirement income, including Social Security and retirement accounts. We will also cover some of the major pitfalls to be aware of concerning retirement savings and investments, and the importance of reasonable withdrawal rates, which is the rate at which one takes distributions from retirement and savings accounts.
Michael Angell, CFP®, EA is an associate professor at the College for Financial Planning. He obtained his bachelor's degree in mathematics at Creighton University. His 20+ years of work experience includes banking, insurance, investments, retirement, and estate planning. In addition to his responsibilities at the College, Michael also serves as a private client services advisor with an independent investment firm and is also a federally licensed tax practitioner with a nationally recognized company. You can contact him at Michael.Angell@cffp.edu.