Step One: Make a Plan, Now

Orange County residents say that saving for retirement and their children’s education are their biggest financial goals. But many aren’t saving enough.

What many people lack, experts say, is a coherent plan that takes into consideration their current circumstances and long-term objectives. The following hypothetical scenarios show what two fictional families might expect to find when developing such a plan.

These examples are based on information provided to The Times by Larry Beltramo, a financial planner at Regency Securities Inc. in Irvine.

Retirement:

Mr. and Mrs. Silver are 50 years old, and they want an annual income of $60,000 (inflation adjusted) when they retire at age 65. They decide they’ll need to plan on the assumption they’ll live for 30 years after retirement.

The Silvers already have $300,000 in retirement savings in their IRAs and 401(k) plans. They have $380,000 in other assets, such as CDs, mutual funds and property.

They would need to put away $12,300 a year on top of their existing savings to reach their goal.

The Golds, also 50, have a tougher row to hoe. They have only $200,000 in their IRAs and 401(k)s, and $250,000 in additional assets.

They would have to sock away $29,700 annually to have the inflation-adjusted equivalent of $60,000 in yearly income after they retire.

College:

The Reds want to start saving for little Johnny, age 5, to attend the private college of his choice when he’s 18.

The average cost of a private college in the United States today is about $20,000 a year. But by the time Johnny attends, assuming an annual inflation rate of 6%, the total cost of four years at a private school will be about $190,000.

The Reds could invest a lump sum of about $62,000 today. If it earned 9% annually, all they’d have to worry about would be Johnny’s grades.

Or, they could invest $665 a month for 13 years. Again, assuming a 9% annual growth rate, they’d achieve their goal.

The Greens have decided that a public university is good enough for their 5-year-old Jenny.

The average cost of a public school today is slightly less than $10,000 a year. After inflation, the total cost of four years of college when Jenny starts in 2010 would be about $90,000.

Figuring on earning 9% annually, the Greens could invest a lump sum of about $29,400 today, or they could put away $315 a month to hit their savings target.

Or there’s always community college. . . .