“We all want to retire,” Davis said. “It’s important to look at the long-term goal, even if retirement is 10, 20 or 30 years from now.”

When can an individual retire? “It’s not dependent on age and service,” Davis said. “It’s cash. Many financial experts estimate that most people will need to accumulate about $1 million to fund their retirement.”

Retirement funds come from three sources: Social Security, the employer’s retirement plan and personal savings. “I can’t emphasize enough,” Davis said, “how important personal savings are to this process.”

Davis also emphasized that retirement planning needs to begin immediately, if it has not not already started. The University plan—in which the University matches 5 percent with 10 percent—is one of the best Davis has seen. “This is rare, it’s very rare,” she said. The funds from the University plan are 100 percent vested from day one— “you own it from the day it’s put in. This is too important a benefit to leave.”

Setting up a good retirement plan requires getting organized financially, a process that begins by looking at your net worth—your assets minus your liabilities. With a laugh, Davis described this as “melting yourself down to dollars and cents.” You should calculate your net worth once a year: “Doing it helps you see where you are financially and helps you set some goals.”

Goals can be divided into short term (1–3 years), intermediate (3–10 years) and long-term (10+ years) and given priority for when they need to be accomplished.

To find if you have a savings gap, look at the amount you are contributing to your retirement and compare it to the amount you will need to contribute monthly to attain your goal. A cash flow analysis, (a detailed review of where you currently spend your money), can help you find that extra money you need to save by changing your spending patterns.

Davis graphically demonstrated the power of compound interest when investing/planning for long-term goals begins right away. A person contributing 10 payments of $2,000 to a retirement plan from age 30–40 years will have $144,858 at age 65 (assuming a 6.75 percent compounded interest rate). If that same person contributes $2,000 for 25 payments from age 40 to 65, with the same rate of return, she will end up with only $126,466 at age 65.

Starting early with retirement planning also allows a person to choose a riskier assest mix, which would be expected to yield a higher investment over time. Davis advises, “The longer you have, the more risk you can afford to take and if you’re willing to put up with ups and down, you’re able to have a higher annual rate of return.”

Davis also advises starting a Supplemental Retirement Annuity (SRA). These pre-tax funds are not subject to the University restrictions for withdrawal, only IRS restrictions. SRAs can be taken out at age 59.5 upon separation from service for any reason, earlier for a financial hardship (as determined by the IRS). Distributions before age 50.5, however, may be subject to a 10 percent IRS penalty. SRAs also can be borrowed against to help meet financial goals that arise before retirement. The SRA serves as collateral for the loan. Because SRAs are taken out before income taxes are assessed, they can be a very wise investment strategy. They are assessed taxes when withdrawn, but because of the interest accrued while invested, SRAs still provide a better deal than most other after-tax investments.

To find out more about retirement planning, the University offers workshops about once a month on relevant topics. Workshops are offered both through TIAA-CREF, www.tiaa-cref.org/moc, and Human Resource Development (HRD), www.umich.edu/~hraa/hrd/. Free, individual, 45-minute counseling sessions also are available from TIAA-CREF. To schedule a session visit the TIAA-CREF Web site or call the Detroit Regional Office, (800) 842-2044. Individuals who already have retired also can schedule sessions or attend workshops.