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Sources of retirement income.


Personal investments, Social Security, and tax-favored retirement plans are considered the proverbial "three-legged stool" of resources for retirement income and security. (1)

Personal Investments include tangible assets (page 201), equity assets (pages 133 and 169), income assets (page 91), and cash reserves and equivalents (page 83). Another important source of retirement income is the nonqualified fixed or variable annuity (page 418 and 420).

Social Security provides retirement benefits for the worker, his or her spouse, and even a divorced spouse (pages 433 and 435).

Tax-Favored Retirement Plans can be established in a variety of ways:

(1) Qualified retirement plans such as defined benefit pension plans, money purchase pension plans, and 401(k) plans can be installed in a corporation, a partnership, or a sole proprietorship (page 389).

(2) Individual retirement arrangements (IRAs), including both individual retirement accounts and individual retirement annuities, can be established by many taxpayers. With a simplified employee pension plan (SEP) or a SIMPLE IRA, employer contributions can also be made to individual retirement accounts (page 403).

(3) Section 403(b) plans are available to employees of public schools and colleges, certain non-profit hospitals, and charitable, religious, scientific, and educational organizations (page 413).

(4) Section 457 plans are available to employees of state and local governments and tax-exempt organizations (page 414).

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Title Annotation:Chapter 17: planning for retirement
Author:Cady, Donald F.
Publication:Field Guide to Financial Planning
Date:Jan 1, 2010
Previous Article:The retirement income shortfall.
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