The process of measuring current assets and future income against assumed spending in retirement, and determining the actions necessary to obtain retirement income over life expectancy without significant risk of asset depletion. Based upon the plan, savings rates and a feasible retirement date are selected. Other retirement goals may be included, such as lifetime gifting to family or charities, large asset purchases, and extensive travel.
Judging by the rate of success, the retirement goal is the most difficult to achieve. It is vital that a financial planner write a thorough, well thought-out plan before a retirement date is selected, and before purchase and lifestyle decisions are made. All factors must be taken into account, including assets, liabilities, inflows, outflows, current and projected income tax situation, risk tolerance, life expectancy, income and asset goals, assumed rates of return on investments, assumed rates of inflation, contingencies such as potential future medical and long term care costs, and many other considerations.