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Lester Bahr CPA, LLC
(484) 707-5934
Allentown, Pennsylvania

It's never too early, nor too late to plan for your retirement. Sooner is, of course, better – making it possible for a 30-year-old, who saves for retirement consistently, to be a millionaire by retirement age. But, even those who don’t start saving for retirement until their late 50’s, can take the edge off retirement expenses by using safe, and often overlooked, strategies.

As you begin to create a solid retirement plan, the monies that define your future security will grow and you will become more confident and optimistic. As a result, you may find that your present financial and emotional well being also take a turn for the better.

The advice in this article and that of an objective financial professional, such as a CPA, may help you enjoy the retirement of your dreams.

A Three-Step Approach to Successful Retirement Planning:

(1) Pinpoint your major sources of retirement income.
(2) Take a realistic look at retirement costs and goals.
(3) Close the gap between income and goals.

Pinpoint your major sources of retirement income:

Assess each of the following major sources of retirement income and determine which ones you have, which ones you don’t and which ones you should.

Social Security: The longer you work (up until age 70) the greater your monthly benefits. You can signup online to see a statement from the Social Security Administration at www.ssa.gov  detailing all the facts and figures surrounding your contributions and anticipated benefits. Review and keep this document. It’s a vital piece of information for your retirement planning. 

Employer Pension Plan: Make sure you understand all the provisions and eligibility requirements of your retirement plan, especially regarding vesting. Retiring even a few months too early (or leaving for another position in advance of vesting) could cost you tens of thousands of dollars over the course of your retirement.

Employer Contribution Plan: The most common variety is a 401(k) plan, a retirement savings plan, funded by employee contributions and (often) matching contributions from the employer. You usually have some say in how contributions are invested. The major attraction is that the contributions are taken from pre-tax salary, and the funds grow tax-free until withdrawn.

IRA – Individual Retirement Account: As IRA is generally available to anyone who receives taxable compensation during the year. Both husband and wife may be eligible to contribute to an IRA. There are currently two basic types of IRA’s for retirement – traditional and Roth IRA’s. A CPA or other financial adviser can help you determine which is best for your retirement needs.

Personal Investments: Experts agree that if you want to maintain your current lifestyle, your retirement income must include investments outside your retirement accounts. In deciding on a retirement investment strategy, consider liquidity, diversity, your tolerance for risk, and your retirement timeframe. Equally vital are the tax implications or your investment decisions. It’s a good idea to get the advice of an unbiased financial expert, such as a CPA, on overall investment strategies and possible tax-sheltered opportunities.

Retirement Careers: More and more Americans are starting new jobs or new careers after reaching retirement age. If this is one of your options, you should anticipate what you are likely to earn and the tax ramifications of your second career.

Take a realistic look at retirement costs:

In order to assess what it will cost to retire, hear are some questions to consider – and keep in mind you are likely to live in retirement for 20 years or more.

  • Will you keep or sell your present home? Move? Upgrade? 
  • Will you want to duplicate your current lifestyle? 
  • Will you be paying to educate children during retirement? 
  • Will supporting aged parents be a consideration? 
  • What medical expenses will be covered (prescription, dental, eye care)? 
  • Will you purchase Medicare Part B? Will you want to purchase Medigap insurance? 
  • Do you plan to travel? How often? Where? 
  • What will your hobbies cost. (i.e. golf, tennis, memberships, etc.)? 
  • What expenses, if any, will you eliminate (e.g., wardrobe, transportation for work)? 
  • Do you plan on making gifts to family members? 
  • What benefits will you lose (i.e. company car)? 
  • Will you plan to continue working? If so, what impact will that have on your taxes? 

Close the gap between income and goals:

For most Americans, there is a considerable gap between what they will actually have and what they will need to retire comfortably. According to the Social Security Administration, Social Security benefits will replace only about 40% of your income if you have average earnings. The sooner you start planning to fill the gap, the better the chance of closing it.

Retirement Strategies:

Some strategies you can begin to implement immediately are:

  • If you are not currently participating in your company’s 401(k) plan, start now. 
  • Earmark at least some minimum amount each month for retirement savings. 
  • Investigate safe and viable investment options. 
  • Look into IRA’s that may be appropriate for your situation. 
  • Consider part-time work options for your retirement based on things you love to do. 
  • If you are in your mid 50’s or older, and anticipate a shortfall, start cutting back on expenses now and put the savings toward your retirement. 
  • If you are a “late starter”, don’t be tricked into higher risk investments with seemingly higher yields. The older you are, the less time you’ll have to recoup any investment losses. 
  • Remember to factor in for inflation which has averaged between 3 and 4 percent over the last 15 years. 
  • Talk to a CPA or other financial planner about both basic and sophisticated retirement planning strategies.


How to Afford a Long Happy Retirement