Looking ahead to retirement Featured

5:56am EDT May 23, 2006
There is a difference between dreaming about retirement and actually planning for it. However, dreaming is not what helps people attain their retirement goals. That can only be attained through solid financial planning, which should start early in life, although it can be initiated at any age.

The keys to planning for retirement are to start thinking early about what you want at a particular age, recognize that there is no “one-size-fits-all” package, and use a collaborative team of retirement and estate planning professionals in the process. That is true for business owners, employees and anyone who wants to enjoy as much security as possible in their retirement years.

Smart Business spoke with Douglas Walouke of J.J.B. Hilliard, W.L. Lyons Inc. to get an insight into the retirement planning process for business owners and employees alike.

When should people start planning for retirement?
Ideally, people should start placing some urgency on retirement — or life — planning as soon as they receive their first paycheck. That is a good time to start putting a little money into an IRA, a 401(k) or some type of plan.

One advantage to a 401(k) or a similar plan is that employers often match employee contributions, which can help retirement funds grow considerably and quickly. Remember, there is power in compounding interest.

What results should people be looking for when planning for retirement?
The most significant is financial security, not only for individuals but for their spouses and families as well. Another is to gain an education about financial planning and pass it on to other people.

What is the ultimate goal of a retirement plan?
It is essentially the same for everybody: to build a ‘life plan’ in which you attempt to prepare financially as well as you can for the unexpected, and to satisfy your hopes, dreams, fears and aspirations. The plan should include taking care of yourself and your loved ones. Once you have that plan in place, stick to it but be flexible.

Even if people start planning early for retirement, they can expect a lot of unexpected events along the way that will impact their plans. Building flexibility into a retirement plan can alleviate some of the problems that might result from those events. A solid financial plan allows you to change your mind along the way as your expectations and situations change.

Is it important for individuals to develop and recognize their expectations?
Everyone has to develop and communicate their own expectations to their advisers. That is especially critical for people who are teaming with financial planning professionals. If financial consultants do not clearly understand their clients’ expectations, they cannot possibly meet, let alone exceed, the expectations.

Successful retirement planning is a team effort, and there must be a good fit between clients and advisers if it is to work effectively.

What are some of the concerns that prompt people to get involved in financial planning?
As with most aspects of the combination of financial and estate planning, the issues differ from individual to individual. For some people, such as business owners, one issue might be what happens if they become disabled and unable to run their companies. For others, it might be guardianship of children, financial support for spouses once they can no longer provide it, or individuals’ health concerns. These are all critical issues that can be — and should be — addressed in setting up life plans.

Another concern that some people have is what happens if they outlive their money, or do not even reach retirement. These are legitimate concerns which need to be discussed, because there are solutions.

Again, there are products and techniques available to address every concern, which is why a collaborative team approach to financial and retirement planning is recommended. The team typically includes a certified Financial Consultant, a CPA and an estate planning attorney.

How do you determine whether you need a financial adviser?
Most people need a financial adviser. The issue is what service the adviser can provide for you now. For example, if you are just starting the accumulating process, you may simply require a plan and some guidance to get the ball rolling. If you have accumulated some assets, you may require active management of those assets to help you reach your goals and to examine more closely your estate planning needs.

Maybe you are in or near retirement, in which case you should be working with a team of advisers to make sure all your affairs are in order and working to your benefit.

If you have not already started planning for the future, start now.

DOUGLAS WALOUKE is a vice president, financial consultant, Chartered Financial Analyst and Chartered Wealth Advisor with J.J.B. Hilliard, W.L. Lyons Inc., in its Columbus, Ohio, branch office. Reach him at (614) 210-6285 or (800) 285-9667