Planning Your Golden Years:

A Retirement Guide

Establish Your Financial Goals

Consumers have often heard that they’ll need about 70% of their pre-retirement income to live comfortably in retirement. But that may be wildly inaccurate.

Rising prescription and health care costs, the fact that people live longer, the desire to travel, or even children or grandchildren who move in, can make retirement more expensive than expected. If you’re more than fifteen years from retirement, a good place to start reviewing what you might need is the easy-to-use BallPark Estimate Worksheet developed by the American Savings Education Council at www.asec.org/ballpark.

As you start approaching retirement, you’ll need to get more serious and detailed about what to expect. Here are a couple of retirement calculators that get high marks for detailed information:

• AARP Retirement Calculator
  (www.aarp.com/bulletin)
• Quicken.com Retirement Planner
  ( www.quicken.com/retirement/planner)

Most people will receive income from two or three sources during retirement, including:

• Social Security
• Pensions or retirement savings
• Part-time work

Before you retire, it’s important to understand what to expect from each.

Social Security: You should get an annual statement of your estimated Social Security Benefits each year before your birthday. Pay attention to this statement.

If it doesn’t accurately list your income, you may be shortchanged on benefits. Contact the Social Security Administration with questions at www.ssa.gov or call 800-772-1213.

If you’re divorced, you may want to find out whether you can get a higher Social Security benefit based on your ex-spouse’s benefit. Also understand how working longer may affect your benefit – either increasing or decreasing it.

Retirement Accounts: Putting your savings in tax-deferred accounts, such as a 401(k), IRA, or Roth IRA, can help you save more money. Check with your employer to see if they match all or part of your 401(k) contributions. If they do match your contributions, you’re leaving money on the table if you don’t take advantage of this money!

Even small contributions over time can make a big difference. If you can’t set aside as much as you’d like, try to get into the habit of contributing something to your retirement now.

Terry Savage, author of The Savage Truth On Money gives this example: If you get a paycheck, 7.5% of your wages is deducted from your paycheck for Social Security, but you probably don’t even know how much it is. Why? “Out of sight, out of mind.” Set up automatic withdrawals from your paycheck or bank account for retirement savings and soon you won’t miss it. As many empl yees of the failed company Enron learned, it can be dangerous to have all your retirement money tied up in the assets of one company – especially when that company is also your employer.

Be sure to keep a diverse investment portfolio for your retirement to insulate your finances from market un certainties. In addition to your 401(k), consider a variety of international stocks, small-company stocks, largecompany stocks and bonds. When the market takes dips and dives (as it eventually does), a diverse portfolio will help offset any losses due to market swings. If you don’t know what types of investments are right for you, talk with a financial planner or ask your employer if there are financial advisory services available through the company that administers your retirement plan.