We all become
more concerned about retirement as we approach and become the "50 plus"
generation. Here are 10 ways to prepare for retirement.
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Top Ten Ways to Prepare for Retirement
by
Cindy S. Morus
1. Know your retirement needs.
Retirement is expensive. Experts estimate that you'll need about 70% of your
pre-retirement income. Lower earners will need 90% or more to maintain your
standard of living when you stop working. Understand your financial future.
2. Find out about your Social Security benefits.
Social Security pays the average retiree about 40% of pre-retirement earnings.
Call the Social Security Administration at 1-800/772-1213 for a free Personal
Earnings and Benefit Estimate Statement (PEBES).
3. Learn about your employer's pension or profit sharing plan.
If your employer offers a plan, check to see what your benefit is worth. Most
employers will provide an individual benefit statement if you request one.
Before you change jobs, find out what will happen to your pension. Learn what
benefits you may have from previous employment. Find out if you will be entitled
to benefits from your spouse's plan. For a free booklet on private pensions,
call the U.S. Department of Labor at 202/219-8776.
4. Contribute to a tax-sheltered savings plan.
If your employer offers a tax sheltered savings plan, such as a 401(k), sign up
and contribute all you can. Your taxes will be lower, your company may kick in
more, and automatic deductions make it easy. Over time, deferral of taxes and
compounding of interest make a big difference in the amount of money you will
accumulate.
5. Ask your employer to start a plan.
If your employer doesn't offer a retirement plan, suggest that they start one.
Simplified plans are available to certain categories of employers. For
information on simplified employee pensions, order Internal Revenue Service
Publication 590 by calling 1-800/829-3676.
6. Put money into an Individual Retirement Account.
You can put $3,000 a year (50 and older can put in $3,500) into a Traditional
Individual Retirement Account (IRA) and delay paying taxes on investment
earnings until retirement age. If you don't have a retirement plan (or are in a
plan and earn less than a certain amount), you can also take a tax deduction for
your IRA contributions. Withdrawals prior to age 59 may be subject to a 10%
penalty tax.) Check with your accountant for eligibility requirements. Check
with your accountant on whether you qualify for a Roth IRA, too.
7. Don't touch your retirement savings.
You'll lose principal and interest, and you may lose tax benefits. If you change
jobs, roll over your savings directly into an IRA or your new employer's
retirement plan.
8. Start now, set goals, and stick to them.
The sooner you start saving, the more time your money has to grow. Devise a
plan, stick to it, and set goals for yourself. Start saving now, whatever your
age.
9. Consider basic Investment principles.
How you save can be as important as how much you save. Inflation and the type of
investments you make play important roles in how much you'll have saved at
retirement. Know how your pension or savings plan is invested. Financial
security and knowledge go hand in hand.
10. Ask questions.
Talk to your employer, your bank, your union, or a financial advisor. Be sure
the answers make sense to you. Get practical advice and act now.
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Cindy S. Morus ( www.phelps-creek.com
) is a Certified Financial Recovery Counselor specializing in showing women and
their families how to achieve financial well-being and peace of mind. She is
also a Certified Credit Report Reviewer and Get Clients NOW!™ licensee. Contact
her at 541-387-2995 or
cmorus@phelps-creek.com She is also the publisher and editor of
"Financial Fitness", an internet gazette dedicated to helping people improve
their financial fitness no matter what decisions were made in the past.
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Reprinted from ValuableContent.Com
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