Saving for Retirement

Retirement Plan Components: Savings, Risk Management, and More

What you need for a balanced retirement plan

You know you should be saving for retirement, and contributing to your employer-sponsored 401(k) is a great start. But your employer’s retirement plan is only one part of a well-rounded savings strategy.

“Personal finance begins with the basic decision between consuming and investing,” says Drew Winters, a finance professor at Texas Tech University.

A good retirement plan will balance the consuming you need to do today with the steps—including investing, insurance and tax strategies—that can support and protect your ability to consume what you need in the future.

Start by saving

Your retirement savings is the foundation of a comfortable retirement. Experts suggest spreading your investments across a variety of accounts, potentially including:

  • A tax-deferred 401(k) or traditional IRA (contributions are typically tax-deductible, and retirement withdrawals are taxed as ordinary income)
  • A Roth IRA (no immediate tax deduction, but retirement withdrawals generally will be tax-free)
  • Taxable accounts, such as a brokerage account or CD.

This multi-faceted approach gives you flexibility: If income tax rates increase during retirement, for example, you could withdraw from non taxed accounts first to reduce your tax liability.

You can save by eliminating debt, too. “For many people, a house payment is their biggest expense,” Winters says. “One of the best things you can do is get to retirement owning your home.”

Consider other sources of income

You may decide to continue working beyond age 65. Some workers stay on at their full-time jobs. Others work part-time in their field, own a rental property or make money from a hobby they love.

No matter how you earn it, extra income can strengthen your retirement plan. Delaying your need to draw on your retirement savings lets your money keep growing. Even a few hundred dollars a month could help you delay taking Social Security, which means a larger monthly benefit in your later years.

Offset risks with thoughtful planning

Longevity risk—the chance you’ll outlive your retirement funds—is one of retiree’s biggest concerns. Others include inflation, which will eat away at the buying power of your savings, and the possibility you’ll need long-term care.

Ideally, your retirement plan will contain strategies that defend against these risks. For example, it might use an annuity to protect against longevity risk, stocks to guard against inflation and long-term care insurance to pay for extended nursing. A SunTrust Investment Services financial advisor can help determine what strategies can best protect your financial plan. 

Make sure your plan is complete

A comprehensive retirement plan also will address what happens after you’re gone. Anyone with children or significant assets should have a will and a trust. These legal documents detail who will care for your children and which people or charities will inherit your assets, such as your savings and house, when you die.

If you have substantial assets, smart estate planning can reduce the taxes your heirs will pay on their inheritance—so more of what you worked to accumulate over your lifetime will pass on to the people and causes you care about most.

No single retirement plan works for everyone, and life changes may require adjustments from time to time. Start investing—and planning—for retirement sooner than later, Winters says, and then modify your plan as your situation evolves. “Most people put it off far too long,” he says. “If you start early, your savings have time to do a lot of your work for you.”

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

Related

Investment and Insurance Products:

Are Not FDIC or any other Government Agency Insured   Are Not Bank Guaranteed  May Lose Value 

© 2018 SunTrust Banks, Inc

equal housing logoSunTrust Bank is an Equal Housing Lender. Member FDIC

equal housing logoEqual Housing Lender. SunTrust Mortgage, Inc

SunTrust, SunTrust Mortgage, SunTrust PortfolioView, SunTrust Robinson Humphrey, SunTrust Premier Program, AMC Pinnacle, AMC Premier, Access 3, Signature Advantage Brokerage, Custom Choice Loan and SunTrust SummitView are federally registered service marks of SunTrust Banks, Inc. All other trademarks are the property of their respective owners.

Services provided by the following affiliates of SunTrust Banks, Inc.: Banking products and services are provided by SunTrust Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank, SunTrust Delaware Trust Company and SunTrust Banks Trust Company (Cayman) Limited. Securities, brokerage accounts and insurance (including annuities) are offered by SunTrust Investment Services, Inc., a SEC registered broker-dealer, member FINRA, SIPC, and a licensed insurance agency. Investment advisory services are offered by SunTrust Advisory Services, Inc., a SEC registered adviser. GFO Advisory Services, LLC is a SEC registered investment adviser that provides investment advisory services to a group of private investment funds and other non-investment advisory services to affiliates. Mortgage products and services are provided by SunTrust Mortgage, Inc.

SunTrust Mortgage, Inc. - NMLS #2915, 901 Semmes Avenue, Richmond, VA 23224, 1-800-634-7928. CA: licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, IL: Illinois Residential Mortgage Licensee #MB-989, Department of Financial and Professional Regulation, 100 W. Randolph, Suite 900, Chicago, IL 60601, 1-888-473-4858, MA: Mortgage Lender license #-ML-2915, NJ: Mortgage Banker License - New Jersey Department of Banking and Insurance, NY: Licensed Mortgage Banker—NYS Department of Financial Services, and RI: Rhode Island Licensed Lender.

"SunTrust Advisors" may be officers and/or associated persons of the following affiliates of SunTrust Banks, Inc.: SunTrust Bank, our commercial bank, which provides banking, trust and asset management services; SunTrust Investment Services, Inc., a registered broker-dealer, which is a member of FINRA and SIPC, and a licensed insurance agency, and which provides securities, annuities and life insurance products; SunTrust Advisory Services, Inc., a SEC registered investment adviser which provides Investment Advisory services.

SunTrust Private Wealth Management, International Wealth Management, Business Owner Specialty Group, Sports and Entertainment Group, and Legal and Medical Specialty Groups and GenSpring are marketing names used by SunTrust Bank, SunTrust Banks Trust Company (Cayman) Limited, SunTrust Delaware Trust Company, SunTrust Investment Services, Inc., and SunTrust Advisory Services, Inc.

SunTrust Bank and its affiliates do not accept fiduciary responsibility for all banking and investment account types offered. Please consult with your SunTrust representative to determine whether SunTrust and its affiliates have agreed to accept fiduciary responsibility for your account(s) and if you have completed the documentation necessary to establish a fiduciary relationship with SunTrust Bank or an affiliate. Additional information regarding account types and important disclosures may be found at www.suntrust.com/investmentinfo.

SunTrust Robinson Humphrey is the trade name for the corporate and investment banking services of SunTrust Banks, Inc. and its subsidiaries, including SunTrust Robinson Humphrey, Inc., member FINRA and SIPC.