What is the best retirement planning concept?

Americans are aware of the need for retirement planning; they just seem to be unable to undertake the task by themselves. This provides an enormous opportunity for the financial practitioner who wants to add this service and its array of associated products to his or her practice.

The evolving emphasis on retirement planning is due to a number of reasons:

• the increasing population of older Americans
• the changing nature of retirement
• the changing profile of the retiree

No longer is retirement considered a single event that separates employment from nonemployment or work from leisure. More often, retirement is seen as a gradual transition from one life stage to another. Financial practitioners who want to work in the retirement planning market must adapt to this paradigm not only by offering products, plans, and advice that are suitable to the new retiree but also by understanding the changing needs of the market.

Given these factors, financial planners can help clients understand that the earlier a person begins to actively and consistently save and invest for retirement, the more funds he or she will be able to accumulate. The power of compound interest coupled with the tax deferral of qualified retirement plans plays a huge role in developing a retirement strategy, as will be discussed in this course.

Factors Impacting Retirement Planning

There are many factors that do—or should—play a role in planning for retirement. All of the following are reasons why developing a sound retirement plan is essential:

• increased retiree longevity
• increasing cost of living
• inflation
• changing the retirement age
• continued employment
• less reliance on defined benefit plans
• uncertain future of Social Security
• the growing need for long-term care
• the nonfinancial aspects of retirement planning

Defining the Retirement Need
The whole of retirement planning encompasses much more than the accumulation of assets. However, asset accumulation is the core and, at least initially, the focus of retirement planning. Building assets for retirement certainly incorporates many different products and plans. But before deciding how a client should fund his or her retirement or what products should be used for this purpose, you need to have an idea of how much money will be needed. Thus, as is the case with almost any financial service undertaking, the first step is to analyze the need. Once the need is defined, you and your client are in a better position to determine how to address the need.

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