Ways to Prepare For Retirement

Know Your Retirement Needs – Retirement is expensive. Experts estimate that you’ll need about 70 percent of your preretirement income – lower earners, 90 percent or more – to maintain your standard of living when you stop working. Take charge of your financial future.

Find Out About Your Social Security Benefits – Social Security pays the average retiree about 40 percent of preretirement earnings.

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.

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, compound interest and tax deferrals make a big difference in the amount you will accumulate.

Ask Your Employer To Start A Plan – If your employer doesn’t offer a retirement plan, suggest that it start one. Simplified plans can be set up by certain employers.

Put Your Money Into An Individual Retirement Account – You can put up to $3,000 a year into an Individual Retirement Account (IRA) and gain tax advantages.

Don’t Touch Your Savings – Don’t dip into 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.

Start Early and Set Goals – Start early. The sooner you start saving, the more time your money has to grow. Put time on your side. Make retirement savings a high priority. Devise a plan, stick to it, and set goals for yourself.

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.

 

Posted by Ardent Editor on Dec 7 2006 in Retirement 101

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