The shaky economy has caused many Americans to rethink their retirement plans. Some say they’ll put off retiring and try to save more money. Others say they don’t expect to retire, either because they don’t want to or they can’t afford to.

While none of us can control the economy, you can take steps to increase the odds of a successful retirement on whatever timetable you choose. That’s one key takeaway from the Consumer Reports National Research Center’s survey of retired and soon-to-be retired online subscribers conducted last fall.

Our fifth such survey since 2007, it asked 21,714 people from 55 to 75 what they did right or wrong in preparing for retirement.

Starting too late and saving too little topped the retirees’ list of regrets. But several less obvious mistakes also emerged from our survey data:

Underestimating expenses Nearly a third of the retirees we surveyed said their expenses were greater than they had anticipated before retiring, while only 11 percent said their expenses were lower. That turned out to have a significant bearing on how satisfied the retirees were overall. Adjusting for the effects of other significant variables, our survey analysts estimated that 76 percent of retirees whose expenses didn’t exceed their expectations were highly satisfied with retirement. For those whose expenses proved to be higher, the number dropped to 56 percent.

What to do: Make a comprehensive list of all your current expenses, cross out those that will end when you retire, and add any new ones, including fun stuff such as travel. Before you retire, consider living on that budget for six months to a year just to see if it’s a comfortable fit. And don’t be surprised if your retirement expenses actually exceed your preretirement ones, at least for the first few years.

Investing too conservatively Retirees who characterized their overall investment style as conservative reported median savings of $478,000, compared with $617,000 for their aggressive counterparts. Readers who considered themselves moderate risk takers fell between those two groups, with $563,000.

What to do: If you’re saving for retirement and all your money is in conservative investments like CDs, money-market funds, and bonds, you might want to add stocks or stock funds to the mix. Financial planners generally suggest retirees also maintain a reasonable exposure to stocks, in part as an inflation hedge. For example, if you were to put $100,000 in a five-year jumbo CD paying a recent interest rate of 2.65 percent, and inflation continued at its recent pace of around 3.5 percent, your investment would lose about $4,800 in value by the end of five years, according to the Consumer Reports Money Lab.

Not diversifying enough We asked readers who said they planned to retire by 2015 what investment vehicles and asset classes they had used to save. Their choices included 401(k) and 403(b) plans; their homes; IRAs; saving accounts and CDs; stocks, bonds, and mutual funds held outside a retirement plan; and half a dozen other options. Adjusting for the effects of other variables, readers with three or fewer types of investments reported median retirement savings of $246,000, compared with $539,000 for those with seven or more types.

Of course, people who have more money might be expected to have it in more places. But the finding held true across income levels, and people with lower incomes who diversified widely often accum-ulated more than those with higher incomes who didn’t. For example, people with incomes under $85,000 who used seven or more investment types reported median savings of $368,000; those with incomes of $125,000 to $199,999 and money in three or fewer places had $315,000.

What to do: If your money is in just a few investments, now might be the time to broaden your horizons. If you need help, consider consulting a fee-only financial planner, who can model different allocations based on your risk tolerance and likely retirement date. You can get names from the National Association of Personal Financial Advisors (www.napfa.org).

Consumer Reports has no relationship with any advertisers on Yahoo! Copyright © 2008-2012 Consumers Union of U.S., Inc. No reproduction in whole or in part without written permission.

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Avoid costly retirement mistakes

If you're caught in a no-man's land somewhere between Roth and traditional contributions trying to figure out whether to pay taxes now or later, you're not alone.

[See top-ranked ETFs by category ranked by U.S. News Best ETFs.]

The Roth versus traditional discussion is happening on talk shows and in news columns, magazine articles, blogs, and message boards.

Gathering information and engaging in your retirement planning is a healthy and helpful exercise, but don't listen to the one-size-fits-all pundits. Roth isn't categorically better, and neither is the traditional option. Everything depends on your personal situation. And sometimes a combined approach may work out best.

The ups and downs of a traditional contribution

Traditional 401(k) contributions come out of your paycheck before you pay taxes. As a result, traditional contributions lower your taxable income. The immediate, concrete benefit is that you'll cut Uncle Sam a smaller check in April.

On the flip side, you'll have to pay ordinary income taxes on traditional 401(k) distributions during retirement. The $50,000 per year you thought you'd have during retirement could be much lower depending on your tax bracket.

The ups and downs of a Roth contribution

Roth contributions come out of your paycheck after you pay taxes. You'll see the major benefit during retirement: no ordinary income taxes on Roth contributions or any resulting capital gains.

[See How to Prioritize Saving in a 401(k) and Roth IRA]

You don't get to reduce your current taxable income, but you get to keep 100 percent of each Roth distribution during retirement. Roth contributions are simpler and leave fewer future unknowns.

Who benefits from what?

For a few people, the benefits of one contribution method seem obvious.

For example, a recent college graduate making relatively little money is currently in a low tax bracket. She doesn't stand to benefit significantly from lowering her taxable income because she's already in a low tax bracket. Though the future isn't certain, we can make an educated guess that she'll be in a higher tax bracket during retirement than she is now. Paying income taxes now seems to be a better idea than paying later when she'll pay at a higher rate.

Conversely, a 65-year-old executive who's at the peak of her earning years is currently in a high tax bracket. Reducing her taxable income could be very beneficial, and it doesn't seem that her tax rate will be higher during retirement than it is now. Making pre-tax traditional contributions now seems to be a better idea.

The big question: What does the future hold? Without a crystal ball, it's impossible to know what your tax rate will be during retirement, even if you know what your income will be. When the tax code changes, each set of Roth and traditional advantages could also change.

Tax diversification

To mitigate the risks associated with an ever-changing tax code, you can engage in tax diversification. In the larger investing world, there are many ways to implement tax diversification. Talk to your tax professional about your options. In the 401(k) realm, your major option is to divide your contributions between Roth and traditional, taking into consideration any contributions your employer is making on your behalf.

[See Using Brokerage Windows to Expand Your 401(k) diversification]

As with asset class diversification, there are details of your personal situation that can assist you in determining your Roth/traditional split. The aforementioned "Who benefits from what?" examples are still applicable, but each investor could diversify with smaller contributions in the seemingly less-advantageous form.

It's also noteworthy that individuals who are closer to retirement have more tax certainty than people with a longer retirement timeline. These near-retirees can make more contributions with planning based on the current tax code.

Since most earners are neither 22 nor 65, most of us face a significant gray area in deciding what our Roth/traditional split should be. As you decide, talk to your retirement adviser and tax professional about the particulars of your situation. And, as with your asset class allocation, make decisions that allow you to rest comfortably at night.

Scott Holsopple is the president and CEO of Smart401k, offering easy-to-use, cost-effective 401(k) advice and solutions for the everyday investor. His advice has been featured on various news outlets, including FOX Business, USA Today and The Wall Street Journal. Keep tabs on Scott on Twitter and Facebook.

Nothing in this article should be construed as tax advice. Contact a qualified tax professional to discuss the tax implications involved in the decision to make Roth or traditional contributions to your retirement plan as well as any other tax matters relating to your retirement plan options.

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Retirement Contributions: Roth Versus Traditional

ARLINGTON, Texas, Feb. 14, 2012 /PRNewswire/ -- How much money do you need to retire? Ten times your income? A million dollars?

The answer depends on who you ask.

A general guideline among financial advisers is to plan on withdrawing four percent of your portfolio each year in retirement. Using this guideline if you want to have an annual income of $40,000 in retirement and plan on living until age 90, you must save $1 million.

Consumers, however, don't agree. According to the Employee Benefit Research Institute's 2011 Retirement Confidence Survey, 31 percent say they can retire comfortably on less than $250,000. Where did $250,000 come from? Forty-two percent of consumers admitted they determined their retirement savings need by guessing.

"Determining the amount of money you need to retire is complex," said Derrick Kinney, a nationally recognized retirement planning specialist and principal of Derrick Kinney & Associates (http://www.derrickkinney.com). "People want the security of a defined number. They want to hear that if they save X amount of dollars, they will have a secure retirement, but there simply isn't a one-size-fits-all answer."

To determine the amount of money you will need in retirement, Kinney recommends starting by defining your idea of a dream retirement early.

"The amount you need to save will vary drastically based on how you envision your ideal retirement," Kinney says. "If your home will be completely paid off or you plan on working part-time, you can probably live on roughly 80 percent of your pre-retirement income. However, if your goal is to live luxuriously in retirement or travel the world without worrying about financial restraints, you may need an annual income greater than your pre-retirement income."

After you figure out what you want to do, estimate how much it will cost. There are numerous online calculators that can provide an estimate of how much you need to save, how much SSI you can expect, etc. Remember to factor in any major goals you want to achieve during retirement. For example, if you want to spend your retirement traveling, you could allocate $15,000 per year to travel.

Next, use these calculators and estimates to make a plan.

"The most common concern I hear as a financial adviser is running out of money during retirement," Kinney says. "To overcome this, I recommend creating a plan and having a back-up plan. I've never heard anyone say they regretted planning too well for retirement."

For example, in your original retirement plan, you could plan on working until age 65, but your back-up plan could include a way to keep your savings on track if you were forced into an early retirement at age 60.

When creating a plan, you must factor in the inflation rate, your expected retirement age, the planned longevity of your retirement and your expected return on investment. Generally, financial advisers use an estimated rate of three to four percent for inflation and four to six percent for return on investments. When in doubt, use conservative estimates.

After following these steps, you should have an estimated, defined and realistic retirement goal. If the number looks astonishingly large and you don't think you could ever save that much, don't panic. Compound interest can make a big impact.

To fully utilize the power of compound interest, Kinney recommends you start saving as soon as possible and make sure to contribute enough to your 401(k) to take advantage of any employer matching benefits.

"What's important is beginning to save early and continuing to save consistently," Kinney says. "You should aim to max out contributions to your 401(k), IRA or both. I usually recommend people who are living comfortably on their current income direct any raises they may receive to their retirement savings."

By determining a retirement savings goal and creating a plan to reach it, you are putting yourself on the path to a more secure and comfortable retirement.

About Derrick Kinney and Derrick Kinney & Associates

Derrick Kinney is a nationally recognized retirement planning specialist that has been interviewed by Bloomberg TV, CNBC, CNN Radio, CBS Marketwatch, Money Magazine, The Wall Street Journal and many more. He is the principal of Derrick Kinney & Associates, a financial planning practice located in the Dallas/Fort Worth metroplex and holds ChFC, CASL, and CLTC designations. For more information on Kinney, visit http://www.derrickkinney.com.

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Dallas Retirement Planning Specialist Derrick Kinney Provides Tips on How to Create a Realistic Retirement Savings Goal

NEWARK, N.J.--(BUSINESS WIRE)--

Prudential Retirement, a business unit of Prudential Financial, Inc. (NYSE: PRU - News), today announced its first longevity reinsurance transaction of 2012.

Under the terms of the transaction, Prudential Retirement will provide reinsurance of longevity risk to Rothesay Life, a wholly-owned subsidiary of The Goldman Sachs Group, Inc. The transaction initially covers pension liability values of GBP 423 million, approximately equal to $665 million U.S. dollars.

The reinsurance secures the retirement benefits of almost 20,000 members of the Uniq Plc Pension Scheme, who are insured by Rothesay Life. The reinsurance transaction is particularly significant as it covers the risks of all life annuities held by plan participants, regardless of age or retirement status, and over half the plan participants reinsured have yet to reach retirement.

“We are happy to partner with Rothesay on another innovative Pension Risk Transfer transaction that helps to secure the retirement benefits of Uniq’s members,” said Amy Kessler, senior vice president and head of Prudential’s Longevity Reinsurance business.

“Rothesay Life is pleased to continue its partnership with Prudential,” said Addy Loudiadis, chief executive officer, Rothesay Life. “This latest transaction demonstrates how we can work together to complete an important transaction.”

Reinsurance contracts are issued by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT 06103. PRIAC is not a U.K. Financial Services Authority (FSA) authorized insurer and does not conduct business in the United Kingdom or provide direct insurance to any individual or entity therein. Prudential Financial, Inc. of the United States is not affiliated with Prudential plc, which is headquartered in the United Kingdom.

Rothesay Life is an insurance company established in the U.K. as a wholly-owned subsidiary of The Goldman Sachs Group, Inc., a bank holding company and leading global investment banking, securities and investment management firm. Rothesay Life provides annuity and other longevity products to corporate defined benefit pension plans, tailored to meet the specific needs of corporate sponsors, trustees and pension plan members. Rothesay Life is authorized and regulated by the U.K.’s Financial Services Authority.

Prudential Retirement delivers retirement plan solutions for public, private, and non-profit organizations. Services include state-of-the-art record keeping, administrative services, investment management, comprehensive employee investment education and communications, and trustee services. With over 85 years of retirement experience, Prudential Retirement helps meet the needs of nearly 3.6 million participants and annuitants. Prudential Retirement has $229.5 billion in retirement account values as of December 31, 2011.

Prudential Financial, Inc. (NYSE: PRU - News), a financial services leader with approximately $901 billion of assets under management as of December 31, 2011, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit http://www.news.prudential.com/.

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Prudential Retirement reinsures retirement benefits through transaction with Rothesay Life

The United States Department of Labor (DOL) defines baby boomers as those born from 1946 to 1964, and generation-Xers as those born 1965-1979. As is expected from individuals who are close in age, there is similarity in retirement attitudes among these two generations. However, there are also differences, some of which have led to different levels of retirement readiness and retirement savings.

In order to make a reasonable comparison, it is sometimes necessary to divide the baby-boomer cohorts into two groups, which has been done when available data allows.

Retirement Savings Attitude and Results
In its 2011 Retirement Confidence Survey (RCS), the Employee Benefits Research Institute (EBRI) compared the attitudes towards retirement savings and amounts actually saved by age. Some of its findings are included in the following table.

Early Boomers
1946 to 1955

Late Boomers
1956 to 1964

Gen-X
1965 to 1979

Percentage of workers saying they've saved for retirement 76 69 70

Percentage of workers who've tried to calculate
how much money they'll need for retirement

53 47 39 Reported total savings and investments of $250,000 or more 19 15 9 Reported total savings and investments of $100,000 - $249,999 22 12 15 Reported total savings and investments of $99,999 or less 60 72 76

Source: 2011 Retirement Confidence Survey - 2011 Results http://www.ebri.org/surveys/rcs/2011

The fact that early boomers have the largest percentage of individuals with more than $250,000 saved is no surprise, as older individuals are more likely to have larger amounts saved because they have worked longer and have had more time to accumulate those savings. Notwithstanding, it begs the question of whether this is enough to meet their retirement income needs.

Boomers Have Lower Retirement-Readiness Confidence
While a large percentage of respondents say they have saved for retirement, the level of confidence that this savings is sufficient to meet their retirement income needs is low and is critically so for boomers. According to a report from the Insured Retirement Institute (IRI), 63% of baby boomers lack full confidence that they will have enough money to cover their retirement needs, whereas only 33% of generation-Xers fall into that category.

This concern is not unfounded considering that individuals age 55 may need up to $550,000 for men and $654,000 for women to cover health insurance premiums and out-of-pocket expenses in retirement when they reach age 65 in 2018.

Generation X More Willing to Take Investment Risk
Compared to baby boomers, generation-Xers are more likely to take above-average risk when investing their retirement savings. Baby boomers are more likely to choose average risk in return for average gain with a large percentage unwilling to take any risk at all. Since the amount of return on investments is often determined by the amount of risk the investor takes with his or her assets, this approach will ultimately affect how much the members of each group invest based on such levels of risk tolerance.

Boomers Withdraw More and Add Less
According to the IRI, the economy significantly affects people's retirement-saving plans. With widespread layoffs and dim job prospects, about 15% of generation-Xers have had to dip into their retirement savings to cover everyday living expenses and 23% have stopped contributing to retirement accounts. Along the same vein, 20% of baby boomers have made early withdrawals from their retirement accounts and 32% have stopped contributing.

The Bottom Line
It is expected that individuals who are closer to retirement will have a more realistic view of retirement readiness. As such, it should not be surprising to find that more baby boomers are concerned about financial security during retirement than generation-Xers. Nonetheless, one's retirement readiness is often determined by one's attitude towards retirement and the actions that one takes towards saving for retirement.

Regardless of age, individuals can get themselves out of this statistical rut by improving their attitudes and taking more positive actions towards saving and planning for retirement when possible.

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How Retirement Attitudes Of Baby-Boomers And Gen-Xers Differ

Question: I'm preparing for retirement and trying to figure out where I should go for money to meet my income needs. I understand that it's important to start by withdrawing from some accounts and save other accounts for later. What's the right sequence?

Answer: There isn't a cookie-cutter answer to withdrawal sequencing because an investor's strategy will be determined by age and tax rate when taking the withdrawal. But a key focus when developing your withdrawal strategy should be preserving the tax-saving benefits of your tax-sheltered investments for as long as you possibly can.

As long as a retiree has both taxable and tax-advantaged assets like IRAs and company retirement plans, it's usually best to hold on to the accounts with the most generous tax treatment while spending down less tax-efficient assets. The following sequence will make sense for many retirees.

1. If you're over age 70 1/2, your first stop for withdrawals are those accounts that carry required minimum distributions, or RMDs, such as traditional IRAs and company retirement plans. (You'll pay penalties if you don't take these distributions on time.)

2. If you're not required to take RMDs or you've taken your RMDs and still need cash, turn to your taxable assets. Start by selling assets with the highest cost basis first and then move on to those assets where your cost basis is lower (and your tax hit is higher). Relative to tax-deferred or tax-free assets, these assets have the highest costs associated with them while you own them, so it makes sense to deplete those first.

3. Finally, tap company retirement-plan accounts and IRAs. Save Roth IRA assets for last.

The Logistics
The sequence in which you tap your accounts will help you determine how to position each pool of money. The money that you'll draw upon first--to fund living expenses in the first years of retirement--should be invested in highly liquid securities like certificates of deposit, money markets, and short-term bonds. The reason is pretty common-sensical: Doing so helps ensure that you're taking money from your most-stable pool of assets first, and therefore you won't have to withdraw from your higher-risk/higher-return accounts (for example, those that hold stocks or more-risky bonds) when your account is at a low ebb. That strategy also gives your stock assets, which have the potential for the highest long-term returns, more time to grow.

To put in place a system for tapping your retirement accounts, start with an estimate of your annual spending needs for the next one to two years and your most recent statements for all of your retirement accounts. Then go through the following steps.

Step 1
Every retiree should have at least one to two years' worth of living expenses set aside in highly liquid (that is, checking, savings, money market, certificate of deposit) investments at all times.

Once you've arrived at the amount of cash that you need to have on hand, determine if your RMDs will cover your income needs for those years (if you're older than 70 1/2). If you're not 70 1/2 and/or your RMDs won't cover your income needs, see if your taxable account will cover your income needs during the next one to two years.

If your taxable account doesn't cover one to two years' worth of living expenses, carve out any additional amount of living expenses from your IRA or company-retirement-plan assets using the sequence outlined above.

Step 2
Once you've set aside your cash position, put in place a plan to periodically refill your cash stake so that it always will cover one to two years' worth of living expenses. This article details the bucket approach to managing your income during retirement.

Step 3
Next, determine a sequence of withdrawals for your longer-term assets, based on the guidelines provided above. The accounts you tap sooner should be in relatively more-liquid investments than those you tap later in retirement. Your longest-term, riskiest assets should go in your Roth IRA because you'll tap them last in the sequence.

Also Keep in Mind
The preceding has focused primarily on retirees who are older than age 59 1/2, the age at which you can begin tapping retirement accounts without penalty. However, if you're between 55 and 59 1/2 and you left your employer after you turned age 55, you can tap your 401(k) without penalty. (You will pay taxes, however, as with all 401(k) distributions.)

And while taxable assets usually go in the "sell early" bin, that's not true if you have highly appreciated assets and plan to leave money to your heirs. If, for example, you own stock that has appreciated significantly since you bought it (and you have no way of offsetting that gain with a loss elsewhere in your portfolio) you may be better off leaving that position intact and passing it to your heirs. The reason is that your heirs will receive what's called a "step up" in their cost basis, meaning that they'll be taxed only on any appreciation in the security after you pass away. If you have a lot of highly appreciated securities in your portfolio (lucky you!), an accountant can help you sort through your options.

A version of this article appeared March 18, 2011.

Excerpted with permission of the publisher John Wiley & Sons, Inc. from 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances. Copyright (c) MMX by Morningstar Inc.

See More Articles by Christine Benz

30-Minute Money SolutionsNeed help picking up the pieces in this turbulent market? 30-Minute Money Solutions by Morningstar director of personal finance Christine Benz simplifies the daunting task of getting your financial house in order. Written for novice and experienced investors alike, this book offers manageable, step-by-step solutions for tackling money challenges and building a comprehensive financial plan in simple 30-minute increments. Learn more.Order Your Copy Today--$16.95

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Get a Tax-Smart Plan for In-Retirement Withdrawals

TORONTO, ONTARIO--(Marketwire -02/14/12)- As the February 29th deadline approaches to make a contribution to a Registered Retirement Savings Plan (RRSP) and as part of its ongoing commitment to improving financial literacy, BMO Financial Group will be providing daily retirement tips during the month of February from BMO Retirement Institute Head Tina Di Vito's new book 52 Ways To Wreck Your Retirement...And How To Rescue It.

Tip Number 27:

Focus your energy on things that really matter to you in retirement

Many people are wary of retirement and may go through different emotional stages, including impatience, fear, excitement, disappointment and/or happiness. Rather than fearing the unknown, embrace this new phase of your life. Retirement can be a rewarding and fulfilling time, if you let it. Consider the following if you are feeling unsure about retiring:

-- Instead of worrying about how you will fill your newly open schedule,
look forward to controlling your 24-hour clock.
-- Leaving your profession does not mean losing your identity - titles are
just titles and do not define who you are.
-- Try a "mini-retirement" or ease into retirement by gradually reducing
your work hours.
-- Do not wait until you retire to try new activities - start them now.

Tip Number 28:

Plan for retirement together and talk to your partner about what you want to do.

You and your spouse may not be on the same page with regards to how you want to spend your retirement. It is critical that you openly discuss your ideas and views for your retirement with your partner so that you are able to plan together. Consider these topics when discussing your retirement plans:

-- Will you both be retiring at the same time?
-- What activities do each of you want to do? List both individual
activities and shared activities.
-- How will family be a part of your retirement?
-- How will you continue to develop friendships and grow your social
networks?
-- What roles will you each play? Will your role at home change once you
retire?

For more information on retirement: http://www.bmo.com/retirement.

Get the latest BMO press releases via Twitter by following @BMOmedia.

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BMO Retirement Tips of the Day: Don't Fear Retirement & Talk to Your Partner About Your Views on Retirement

BOSTON, MA--(Marketwire -02/13/12)- The Retirement Income Industry Association (RIIA) expands the curriculum for the Retirement Management Analyst (RMA(SM)) designation, an advanced science-based education program in retirement income planning and management. Previously offering Core and Advanced topics in one curriculum, the development of RMA(SM) training responds rapidly to industry demand to better educate financial services professionals -- from financial advisors to skilled call center personnel -- to serve pre-retirees and retirees.

"The big news is -- as the content of RMA(SM) curriculum grows through subsequent editions of the text book and resources -- the formalized distinction between Core and Advanced topics moved to its next step of planned evolution," explains Francois Gadenne, Executive Director and Chairman of RIIA. "In the 4th Edition of the RMA(SM) Curriculum available during our Spring Conference (March 19/20 in Chicago),the program of study Core vs. Advanced differentiation matured into Level 1 Curriculum and Level 2 Curriculum."

Level 1 Curriculum trains staff professionals on core retirement income topics, enabling them to speak more knowledgeably to clients entering into, or managing, this critical stage of retired life. Call center representatives, agency staffs, defined contribution phone representatives and others interacting daily with clients greatly benefit from this training.

Level 2 Curriculum takes the training to the next level, equipping financial services professionals who manage their own practices such as wealth management teams, independent financial advisors, insurance agents, Registered Investment Advisors (RIAs) and dually registered representatives with deeper understanding of more advanced topics that help them effectively serve clients with emerging retirement issues. The greatest benefits go to organizations training all client-facing associates, putting everyone on the same page and enabling them, as teams, to offer retiree clients services they need.

Launched in 2009 through requests from RIIA members and in response to demand from financial advisors and consumers, the RMA(SM) designation is the only scientifically-based, rigorous retirement planning education and certification serving the financial services industry including defined contribution and retail distribution organizations, financial advisors, broker dealers, banks and insurance companies. Individuals earning the RMA(SM) designation are uniquely prepared to deliver retirement income solutions and services to clients who want a secure income stream and ongoing professional management throughout their retirement years. To help RMA(SM) candidates prepare for the exam, RIIA partnered with software providers and leading universities.

"Continual RMA(SM) program enhancements including annual curriculum updates are the result of RIIA members asking for more precise, disciplined, scientific-based instruction to support financial advisors, call center personnel, and other professional practitioners to better serve the millions of Baby Boomers in retirement," comments Stephen Mitchell, Director of Advisor Education for RIIA.

About the Retirement Income Industry Association (www.riia-usa.org)

Founded in 2006 by leading financial companies, advisors, associations and academics, the Retirement Income Industry Association (RIIA) provides a rigorous, research-driven, household-focused foundation for developing retirement solutions to serve retirees today and into the future. A non-profit organization, RIIA achieves its mission through a unique View Across the Silos allowing members to see change and disruption before others while achieving competitive advantage through RIIA-provided space, discussions, advanced education, market insight, research, comprehensive data, standards and thought leadership for successful retirement income management. RIIA members span the entire industry and include banks, insurers, mutual fund companies, brokerage houses, financial advisors and distributors, plan sponsors, researchers, technology companies, marketing firms, academics, and industry media.

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Retirement Management Analyst (RMA(SM)) Designation Expands Into Level 1 Curriculum and Level 2 Curriculum

Most Americans no longer aspire to retire early. Workers are increasingly pushing back their desired retirement age and wondering if they will be able to retire at all.

The age workers expect to retire has increased from an average of 60 in 1995 to 66 in 2011, according to a Gallup poll. The proportion of people aiming to retire early has plummeted from 50 percent in 1995 to 28 percent in 2011. Most Americans now expect to retire at age 65 or later.

[See The 10 Best Places to Retire in 2012.]

"It's just not possible for people to work for 30 or 40 years and support themselves on their assets for another 20 or 30 years," says Alicia Munnell, director of the Center for Retirement Research at Boston College. "Many people saw their 401(k)s decimated by the recession, and many people also saw their house lose value."

The recession has accelerated the trend of Americans pushing back their retirement date. Almost half (46 percent) of people age 50 and older say they now plan to retire at a later age than they did three years ago, and the reason is often because the value of their 401(k) and other retirement investments has declined, according to a recent Towers Watson survey. Unsurprisingly, workers depending on their 401(k)s to finance retirement are planning longer delays than people with a traditional pension.

More time to save. Saving enough to fund a 30-year retirement is extremely difficult. Postponing retirement allows you to reduce the number of years you'll need to finance and gives your assets more time to grow. "Many people at the end of their work life are making the best money they ever have," says David Weir, director of the University of Michigan's Health and Retirement Study. "In those last few years, once their kids are out of college and they have paid off their mortgage, for many people, this is when they really have the ability to save."

[See 8 New Retirement Rules.]

There are many tax advantages to delaying retirement. Workers age 50 and older can contribute up to $22,500 to a 401(k), $5,500 more than younger workers can defer paying tax on. Older workers can also contribute $1,000 more to an IRA than people under 50. If you are still working, you can also delay required minimum distributions from your 401(k). Traditional 401(k) withdrawals are generally required after age 70 1/2. But if you are still employed and don't own 5 percent or more of the company sponsoring the retirement plan, you can continue to delay withdrawals from your 401(k) and the resulting income tax bill. However, distributions from traditional IRAs are required even if you are still working.

Bigger Social Security checks. Social Security benefits are calculated based on your 35 highest-earning years in the workforce. If you continue to work and currently earn more than you did earlier in your career, you can boost the size of your Social Security payments.

Delaying the date you sign up for Social Security also results in bigger monthly checks. While you are eligible to claim your payments beginning at age 62, your payout will be reduced unless you wait until your full retirement age, which for most baby boomers is 66. Your payments will further increase for each year you delay claiming up until age 70. "For people who have average to above-average health, many of them would do better by delaying claiming Social Security to get a better benefit," says Weir. These higher payments continue for the rest of your life and are indexed for inflation.

[See How to Finance Life Until 100.]

Health benefits. Purchasing an individual health insurance policy in your 50s or early 60s can be difficult and extremely expensive. Waiting until at least age 65 to retire eliminates a potentially huge retirement expense: retiree health insurance. Most workers (65 percent) base their retirement date on their eligibility for Medicare at age 65, Towers Watson found. Continuing to work for a company that provides benefits is one of the most cost-effective ways to find health insurance before age 65. There's also some evidence that delaying retirement has health benefits. "People have a social network at work, and they have friends and activities through the workplace that help keep their mind nimble," says Olivia Mitchell, director of the Pension Research Council at the University of Pennsylvania. "In countries with early retirement, there are much greater rates of mental and physical decline."

But when you retire isn't always a choice. Some people find themselves pushed into retirement ahead of schedule by job loss, health problems, or the need to care for family members. Almost half (45 percent) of retirees say they left the workforce earlier than planned, often due to circumstances beyond their control, according to a 2011 Employee Benefit Research Institute survey.

Second careers. Retirement is no longer a one-time, permanent event. "People are less likely today to move directly from full-time employment to full-time retirement," says Richard Johnson, a senior fellow and director of the program on retirement policy at the Urban Institute. Instead, exiting the workforce is becoming more gradual, with many employees moving to another job before leaving the workforce completely. "The baby boomers are completely reinventing the idea of retirement," says Mitchell. "They were starting to mull over this whole creative set of ideas, including working longer, changing careers, going to part-time work, having a bridge job, and becoming consultants before the financial crisis hit."

[See The Growing Challenge of Funding Retirement.]

But delaying retirement can be difficult at a time when there aren't enough jobs to go around and older workers are at the top of the pay scale. "If you want to keep working, it is a good idea to have a job lined up before you quit your current job. It can be very risky to assume you will leave this job and find another one," says Johnson. "You're probably getting paid more with your current job than you would at a new job. Most people who change jobs at older ages get a pretty significant pay cut."

Workers who need to fund their retirement years with personal savings have three choices: "You have to either save more, work longer, or cut your standard of living in retirement," says Munnell. "The best thing is to try to keep working full time as long as you can."

Twitter: @aiming2retire

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How Long Should I Work Before Retirement?

Everyone has a different idea for how they want to spend their retirement. Given how varied people's goals are, why is it reasonable to think that everyone should have the same retirement saving plan?

My parents and Sarah’s parents are roughly the same age. Their retirement-age experieces are much different than each other.

Skip to next paragraph Trent Hamm

The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two. Our busy lives are crazy enough without having to compare five hundred mutual funds – we just want simple ways to manage our finances and save a little money.

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My parents are both retired in the traditional sense. They have a limited fixed income made up of Social Security and some pension money. Their house and vehicles are long since paid for, and since their house is relatively small and older, insurance and property taxes are low.

Sarah’s parents are a completely different story. Her father will probably work until he can’t, partially for income reasons and partially because I think he deeply enjoys his work on many levels. Her mother had a “pseudo-retirement” but couldn’t stand it, so she returned to work. Thus, their income level is significantly higher, but their expenses are higher, too. They have nicer cars and travel regularly.

My own “retirement” plans involve a mixture of working on my own side projects and doing volunteer work. Much like my in-laws, I don’t feel happy unless I’m working on large projects. When I find myself without such large projects, I tend to drift and feel depressed.

As for Sarah, I expect her to very oriented toward volunteerism and any grandchildren we might have to take care of.

It’s pretty clear from just a simple survey of my own life that everyone has a different life plan for their 60s and 70s. Some people intend to enjoy leisure and volunteer work. Other people are wired to be productive in various ways.

Think about it for a minute. What do you plan to be doing in your 60s and 70s? Is it the same thing that you expect all the people around you to be doing?

Given how varied the plans people have for their later life are, why is it reasonable to think that everyone should plan for retirement in the exact same way? 

For example, let’s say my dream is to switch to a career path as a novel writer as soon as I possibly can, living off of my investment income starting at the youngest possible age. This means that I’d be choosing to live very lean in my 40s and 50s while I get some novels published, then enjoy more income from the combination of investments and book income in my 60s and 70s.

In that scenario, traditional retirement savings would serve a relatively small role. I might want to fund a Roth IRA or something to guarantee a bit more late-in-life income if needed, but most of my saving for the future wouldn’t be in retirement investments. I would focus instead on investing outside of retirement accounts to fund my dream.

On the other hand, a person like my father-in-law, who fully intends to work until he’s unable to do so, won’t need to live for twenty five years off of his retirement accounts. Much like my earlier scenario, the “traditional” use of a retirement saving plan doesn’t really fit his plans. It’s worthwhile for him to have some money in his retirement savings, but does he need to save for twenty five years of retirement?

I don’t have the ultimate answer as to how the people in the two above scenarios should be saving for retirement. However, it’s pretty clear that these scenarios don’t simply follow the “save 15% for retirement each year” plans that are often simply prescribed for people.

So, what does this mean for you?

First of all, thinking about your plan for your whole life pays off. We don’t always know exactly where our life is going to lead, but I’ll say that the general idea I had for my life when I was in my early twenties is more or less coming to pass. I envisioned having children and having a career that I had creative control over.

Naturally, big unexpected things can always derail those plans. I could get sick. Something else unforeseen could happen. In the vast majority of those scenarios, though, I’m not helped by having a lot of retirement savings, though I am helped by having assets on hand.

Second, understanding how to translate those plans into a financial plan is key. This might involve the aid of a financial planner, but at the very least, it involves some significant time studying investing options and knowing in what situations they’re most useful.

Finally, and this is key, just because you’re not saving for retirement doesn’t mean you’re not saving. If you have a future, it’s valuable to spend less than you earn and save for that future. No matter what your future self will be doing, he or she will be better off if he or she has money in the bank.

Retirement savings, in the form of a 401(k) or a Roth IRA, has certain advantages. However, those advantages only really matter if the direction of your life allows you to take advantage of them. Your life is not dictated by your retirement investment plans. Your retirement investment plans, if they’re needed at all, are dictated by how you live your life.

Spend less than you earn. Use retirement plans to help you for whatever you’ve got planned for your 60s, 70s, and later. Don’t assume that’s enough, particularly if you have a plan for your future.

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How to find a retirement saving plan that works for you