The past year's economic roller coaster ride leaves many questions about the future and how best to prepare for it. Even if you don't have all the answers, one thing is certain: it takes focused, consistent effort to attain long-term financial security. When it comes to retirement, reaching your goals is achievable if you think beyond your 401(k).

Goals for Your Lifetime
Retirement planning is a lifetime process — from accumulation, when you build 401(k) and other retirement savings, through distribution, when funds are disbursed as monthly income. The earlier you start saving, the more you benefit from compounding interest as well as employer-sponsored 401(k) accounts and matching contributions. Even small additions made consistently over time can grow into a significant nest egg in later years.

According to the 2009 Retirement Confidence Survey by the Employee Benefit Research Institute, only 44 percent of workers have tried to calculate how much they need to have saved by the time they retire. An equal proportion of workers simply guess at how much they will need for a comfortable retirement.

To reach financial goals, you must define them. That is why your financial representative creates a holistic financial security planning process to identify the savings targets and vehicles best for your situation. The process evaluates your financial security risks, income, family goals, lifestyle expenses and anticipated retirement age to design a roadmap to financial security. After creating the plan, your representative will help track your progress and adapt it periodically as circumstances change.

Retirement Income Plan: The Balancing Act
When retirement time nears, so do challenging decisions and exciting choices about how to spend your days and distribute your assets. The focus changes from accumulation to lifetime distribution as you create a retirement income plan that can support your new lifestyle and make your money last. Your financial representative will help you find the right strategy by exploring the following:

Risks

Health risk — Health costs typically increase during retirement, so insurance is essential. It may be available through an employer, individual policy, or Medicare.

Market risk — Without the long time horizon that works in the younger investor's favor, many people may move toward a more conservative asset allocation for retirement.

Long-term care risk — A long-term care event can affect even substantial retirement funds, so be sure to accommodate that risk within your financial plan (see our 2008 Cost of Long-Term Care Study to help you understand rates in your area).

Income Options and Timing

Assets — Consider all available assets, as well as the potential tax impact of liquidating or holding them (e.g. for qualified vs. nonqualified investments or those with timing restrictions, such as IRAs or CDs).

Guaranteed vs. non-guaranteed — Income may come from resources that are guaranteed for your lifetime, such as Social Security, employer pension or personal annuity; or from non-guaranteed assets such as those with market risk (e.g., stocks, bonds, mutual funds, stock options).

Reliable income streams — Ideally you will allocate multiple income streams to produce sustainable income over time, combining guaranteed sources such as annuity or pension plans with conservative ones, such as bond investments, and more risky options such as mutual fund portfolios from which you draw a percentage each year.

Life After Retirement

Your goals — Where you live and how you spend your time will affect when and how you use your resources. Would you like to pursue certain activities or hobbies? Do you expect to travel, volunteer, or dine out regularly? Leave a legacy? Knowing your "needs" vs. "wants" will help with planning.

Timing of retirement — Your retirement age, when you begin taking Social Security and whether you plan to work part-time (or not at all) can have a dramatic impact on your budget and how long your money will last.

Lifespan and stages — With the average U.S. life expectancy exceeding 78 years, according to the National Center for Health Statistics, many people will live — and spend — 20 - 40 years in retirement. You may want to explore options for lifetime income as part of your plan if you are concerned about outliving your income.

With proper planning and realistic expectations, it is possible to achieve your retirement vision and generate income for your lifetime. Looking at retirement planning as a lifetime process, and saving early and consistently to accumulate the assets you need, will provide the best opportunity to make your money last and live your retirement dream.