Planning for Retirement Needs. (Book Reviews).

Planning for Retirement Needs, 5th ed., David A. Littell and Kenn Beam Tacchino, 2001, Bryn Mawr, Pa.: The American College

This book is used by The American College in its retirement planning course, which is one of the requirements for obtaining the Chartered Life Underwriter (CLU)

or Chartered Financial Consultant (ChFC) designations. The authors are both associated with The American College. Littell is a professor of taxation at The American College. Beam serves as a consultant to The American College and is a professor of taxation at Widener University. Both authors are lawyers with experience in retirement and pension planning.

The authors' purpose for the text, as stated in their preface, is to focus on the practical application of retirement planning in a financial services practice and addresses an audience with little or no experience in the retirement field. They have incorporated features such as planning notes and sidebars directed at financial services practices into the text. They also use extensive examples and case studies to examine how the topics discussed are applied in the financial services arena.

The authors designed the text to be practitioner-oriented. They want it to provide practical and educational information concerning retirement planning for businesses, business owners, and individuals. They achieve their objectives with the text. Each chapter introduces concepts that can be used by business owners and individuals for their retirement planning. In addition, the planning notes and sidebars provide valuable tips and discuss important issues for professionals involved in retirement planning.

The text is divided into two sections--one that focuses on retirement planning for businesses and one that discusses retirement planning for individuals. Within each section, the authors highlight the basic information and concerns for retirement planning. They also recommend other sources for readers who want more details in specific areas.

The first section of the text, which focuses on retirement planning for businesses, is organized as follows:

* Chapter 1 provides an overview of pension and retirement planning. It discusses the retirement market, general retirement planning vehicles, and the benefits of tax-advantaged retirement plans for employers and employees.

* Chapter 2 covers the retirement field. It introduces legislative and regulatory concerns and provides information on organizations for retirement planning professionals to use as resources and to become members.

* Chapter 3 introduces the initial concerns for financial planners who address the retirement planning needs of businesses. It describes how to identify business needs and objectives, incorporate fact finders, and choose between basic retirement plan options.

* Chapters 5 through 7 discuss in greater detail the various types of retirement plans a business can establish--from traditional pension plans to profit-sharing and 401(k) plans to SEPs and SIMPLEs. They explain various requirements for each plan and the retirement planning objectives each plan is best designed to meet.

* Chapters 7 through 10 describe how to work with businesses to design the specific plans selected. They address such features as participation rules, benefit and contribution formulas, vesting and loan provisions, and benefits other than retirement benefits (such as death or disability benefits).

* Chapters 11 and 12 provide information on making funding decisions. They discuss how to establish plan funding requirements and investment guidelines and also address legislative constraints and funding vehicles.

* Chapters 13 and 14 consider the installation, administration, and termination of retirement plans. They offer advice on how to set up and administer plans, as well as on the requirements for terminating retirement plans.

* Chapters 15 and 16 address nonqualified retirement plans, their design, and their uses. The previous chapters focus on qualified and tax-advantaged plans, but in many circumstances, nonqualified plans are valuable tools for businesses to consider and implement.

The second section of the text addresses individual retirement planning issues. The following chapters provide valuable information for financial planners in this area:

* Chapters 17 and 18 describe individual retirement plans. While these two chapters are listed as part of the business retirement plan section, apparently because they include a discussion of how IRAs can be used in SEPs and SIMPLEs, they address the types of plans individuals might consider for their own retirement planning needs. These chapters describe IRAs and their characteristics.

* Chapter 19 introduces individual retirement planning. It discusses the reasons individuals need to plan for retirement, retirement planning objectives, and how financial planning professionals can help individuals with their retirement planning.

* Chapter 20 describes in more detail how financial planners can identify their clients' needs and objectives. It also discusses strategies for addressing clients' retirement goals.

* Chapters 21 through 23 address how to determine clients' postretirement monetary needs. A detailed case study further demonstrates how to incorporate these methods into retirement planning for individuals.

* Chapter 24 considers investment alternatives for funding retirement needs. It discusses general investment concerns, such as the risk-return tradeoff, life-cycle considerations, and portfolio construction.

* Chapters 25 and 26 cover distributions from retirement plans. They describe tax issues, rollovers, and transfers, and distribution methods.

The chapters use practical advice, examples, and cases to develop a practitioner's point of view. Illustrations of how the topics discussed can be used by financial planners to better meet their clients' needs provide valuable insights for readers.

With the 5th edition, The American College has also incorporated many of the features that it used to include in its study guides into the text. The educational objectives for the chapter and an outline of the reading material are provided at the beginning of each chapter. Key words and phrases are defined in the margins throughout the chapter. In addition, the margins are wide enough to allow room for notes as one reads through the chapter. At the end of each chapter, a chapter review includes a list of key terms, review questions, and self-test true-false questions. The answers to all review questions and self-test questions are provided at the back of the text. The incorporation of these items makes the text more useful for students, both those studying for professional examinations and those using the text as part of a traditional college or university class.

In general, the text is well-written and easy to follow. The examples, tips, and cases help drive home the subject matter and illustrate how financial planners can use the information in their practices. The review material helps readers assess their understanding of the topics. The text meets the objectives of its authors and would make a valuable resource for the beginning as well as the experienced retirement planning professional.