How Does One Plan For Retirement? 
First establish your time to retirement , how long until I retire ? Then create an investor profile to establish your risk tolerance . What is the beta -LRB- volatility -RRB- of the investment youre considering ? Then estimate you income tax as a percentage of your gross income . What was your gross , what do you actually pay the IRS . This helps determine if you should use a qualified plan . You should probably use a qualified plan if your employer matches your contributions . Diversification is a key component of constructing a retirement plan . Diversification in your investment portfolio . Diversification in short , midterm and long investment periods . Diversification in taxation : taxable , tax deferred and tax free . This all matters when you take distributions from your retirement plan later in life . 