Building a financially secure retirement begins much earlier in life than most people realize. Waiting until age 55 to begin mapping a strategy is not wise. With today's longer life spans, rising medial costs, inflation, and volatile stock market, planning needs to begin at the age of thirty.

Three steps in planning for a secure retirement are assessing your needs, determining your retirement income, and planning your investments.

Assessing Your Needs

Determine the amount of money spent to maintain your current lifestyle. An accurate method to calculate this is to record expenses over a four-month period. This should give an accurate picture of the cash outflow.

Of course, once retirement comes the expenses may change. For instance, the house mortgage may have been eliminated. Additionally, other factors may enter into the equation. As you age, you may find a larger portion of your budget going to health care and insurance premiums. Communication with a spouse or others involved in your life is essential for determining future financial needs. A change of residency or the updating of vehicles drastically affects your budget in the retirement years.

Even though predicting an exact retirement budget is not possible, using your current cash flow is the place to begin planning for a secure retirement.

• Determine the expenses in your current lifestyle.
  
  
• Predict the expenses in your retirement years.
  
  
• Remember that with inflation, the cost of goods and services will double over a 20-year period.

Determining Your Retirement Income

After finding your projected retirement expenses, determine retirement income. Two primary sources of retirement income are company pension plans and social security. Other sources of retirement income will depend on how well you invest your current income and assets you secure.

The company's human resources department will answer questions about the pension plan.

The Social Security Administration mails updates to contributors each year with personalized information regarding retirement benefits. If you have not received this information, contact the Social Security Administration at 800-722-1213 or visit their website to request an analysis: http://www.ssa.gov/

Planning Your Investments

Investment strategies are generally planned differently for two age specific groups: ages 35-50 and age 50+. The 35 - 50 age group is inclined to make riskier investments in the hope of higher returns on the investments. The 50+ age group is inclined to make more conservative investments for lower rates of return on the investments, but with less likelihood of losing principal that will be needed once in a retirement period.

For people within the 35-50 age category, think about long term investments. These include stocks, bonds and mutual funds. Each choice has positive and negative qualities.

Long Term Investments

• If you invest in stocks, avoid excessive changes in your stock portfolio. Each change costs money in fees. Over a period of many years, the stock market has typically produced a fair rate of return for the investment.
  
  
• If you invest in bonds, do the research. Bonds have varying degrees of risk- the higher the proposed return on your investment, the higher the risk.
  
  
• If you invest in mutual funds, know that your investment is pooled with other people's money for a wider investment strategy. Mutual Funds is the more conservative of the three investment strategies.

Other Investment Strategies

• In investment strategies, remember that investments offering a high rate of return generally carry a higher risk.
  
• Avoid a limited portfolio, as some companies or stocks may experience an unexpected decline.
  
• At age 50, become more conservative with your portfolio.
• Investigate your company's employer-sponsored retirement plan. Many companies offer matching funds to the money you invest in the company.
• Investigate Individual Retirement Accounts (IRAs), Roth IRA's, Keogh's, SEP-IRA's - all tax advantaged retirement plans - to determine if they meet your needs.
• Annuities are being revised to offer a more secure investment designed for individuals approaching retirement, while still offering the opportunity to participate in stock market gains.
• Having an automatic withdrawal into a savings account or mutual fund is a conservative method of building assets (although not the most effective tax wise).

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