Planning for retirement is kind of like working a puzzle without all the pieces. Missing are the ones that tell you how long you’re going to live or what inflation and tax laws will be, but even with these unknowns you can — and should — try to picture your retirement based on what you’ve saved so far.

Financial advisors say while it may be tough to face the picture as it is now, it’s best to make those projections, see what’s deficient, then devise a plan to improve the picture.

Tom Liguzinski, CPA, PFS, of Select Wealth Management, recommends adopting the anticipatory, forward-moving philosophy of hockey great Wayne Gretzky, who said, “I skate to where the puck is going to be, not where it’s been.”

Good idea, because these days, without the benefit of fully-funded traditional company pension plans, and with Social Security accounting for only about 30 to 40 percent of retirement income, the burden of funding retirement lands squarely on one person.

“You’re responsible for your own retirement,” states Senior Portfolio Manager Shawn Fishbaugh of Bartlett & Co.

Even with retirement planning, there are do-it-yourselfers.

“There are plenty of people who will study this and learn the ins and outs of retirement planning,” says Chris White, CFP and wealth strategist for the Private Client Group at National City. “It’s like fixing a car — if I studied long and hard, I could probably do it, but it would take a lot of time.

“Generally, when you get in front of a professional (financial adviser), there’s no charge for the initial meeting,” as the first meeting may serve to evaluate whether the client and adviser are right for one another, White continues.

Whether hiring help or doing it yourself, “someone’s got to be the quarterback,” calling in advisers to cover all the relevant bases. Among them? Investments, insurance, tax planning and estate planning, Fishbaugh says.

White advises clients to have a discussion with their adviser, not simply a review of the pertinent documents. In it the parties should identify such relevant details as what the client’s plans are for retirement and what provisions they’d like to make for their heirs and whatever they leave behind.

“Are your costs going to go up or down in retirement?” White asks. Even if you won’t have the incidental costs associated with working, if you plan to travel much, for example, costs will go up.

A key determination to be made is “the number,” meaning the figure the client will need to amass to live on in his retirement, observes Steve Eklund, managing director of the private client group of Johnson Investment Counsel.

“How much money do I need to live on is the big question, but it’s not as hard for boomers to answer as for younger folks who are still having children and buying homes,” White adds.

First, the planner determines how much the client currently needs per month, then takes into account rising inflation rates which, given such needs as prescriptions, typically hit older people harder, White says.

A rough estimate that planners seem to agree on is that people will need about 20 to 25 percent of their current monthly income during their retirement to maintain the same purchasing power.

“If someone in their 50s has a monthly cash flow need of $5,000, in 15 years, adjusting for inflation, they will need to have saved $2 million,” Fishbaugh estimates.

To avoid the possibility of outliving the client’s assets, that figure also reflects a generous life expectancy — into one’s 90s. 
“You’ve saved X and we need to get you to Y,” says White. A next step is looking at the client’s asset allocation. Generally, if the client has planned well, investing more conservatively makes sense, but if she’s behind the 8-ball in her savings, it could be better to take on more investment risk.

For folks in their 50s to 60s, a range of 65 to 75 percent stock concentration makes sense, with the higher concentration at the earlier age, points out Mark Busher, director of investments for PNC Wealth Management.

Of course, a well-diversified portfolio will include stocks — including some international, large cap, mid-cap and small cap for their growth potential —  bonds, and mutual funds, Busher adds.

Diversification should also extend to holding accounts that are taxed differently, both Busher and White agree. A mix of retirement savings accounts and non-retirement accounts can be a tax-efficient strategy and one that sounds like it might contradict the long-espoused advice of socking away as much money as possible in tax-deferred savings vehicles such as 401 (k)s.

The advisers still recommend saving as much as possible in those accounts, but also in non-tax-deferred savings accounts. In the case of a client who can’t max out their 401(k), White prescribes this plan: contribute enough to get the full company match, then contribute as much as you can in a Roth IRA (which is per person, not per household, and even money-earning teens can contribute), and if there’s savings dollars left over, go back and put them into the 401(k).
“As an aside, there are no magic formulas for constructing retirement portfolios,” says Busher who, for that reason and the fact that inflation and tax rules can change, advises against relying solely on online retirement plan calculators.

Boomers often have other responsibilities vying for their savings dollars, such as dependent parents and children.

“If you’re ever faced with the dilemma (of saving for a child’s education or your retirement), always, always, always save for yourself first,” says White, who advised saving in a 529 education plan only after ensuring you’re saving enough for your retirement needs.

“With college, there is virtually always a way, whether loans, grants, work study programs —  people become very resourceful when they have to,” White says. “Whereas, retirement is an absolute.”

The concept of retiring early has been challenged by many factors, chiefly longer life expectancies.

“You need to think this through carefully and evaluate whether retiring early will work for you,” Fishbaugh says. “If you retire at 55, you may have 40 more years of living and spending ahead of you.”

One final word from Mark Kleespies, who is a partner at THOR Investments. He advises that “you can’t start too early. If you start at an early age, your total contribution will be less, due to interest.”
Plan for Retirement:

A recent survey by the American Institute of CPAs shows the top concern for 9 out of 10 baby boomers is whether they will have enough money to retire.
“Most retirees are faced with the same problem that divorcees and those who are widowed face: their income and investment assets are not adequate to sustain their current lifestyle,” says William E. Hesch, Esquire, CPA, PFS, and owner of William E. Hesch law and CPA firms in Oakley. “Changes in their spending habits are needed to make ends meet.”
The issue is further complicated by growing prices for gas and medical services, and the fact that since 2005 the country has been in a negative savings mode, Hesch adds.
“The basic root problem is that most people continue to live beyond their means, whether their annual incomes are $20,000, $50,000, $100,000 or $150,000,” concludes Hesch.
So what should boomers do now to better their situation later?

Hesch recommends the following:
 Downsize the big-ticket categories of housing and cars
 Track spending daily for three months to see how much you’re spending and determine if it’s excessive
 Do not purchase anything without first asking yourself “Do I really need it?”
 Be disciplined and spend less on eating out, entertainment and vacations