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. Call the Social Security Administration at 1.800.772.1213 for a free Social Security Statement and find out more about your benefits at www.socialsecurity.gov.

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. For information on simplified employment pensions, order Internal Revenue Service Publication 590 by calling 1.800.829.3676. Or you can view a copy on the IRS Web site.

Put Your Money Into An Individual Retirement Account

The Advantages of Starting Early-Start now! This chart shows what you would accumulate after 5, 15, 25, and 35 years if you saved $3,000 each year and your money earned 7% annually. You can put up to $4,000 a year into an Individual Retirement Account (IRA) and gain tax advantages. This chart illustrates the way your account can grow in an IRA.

When you open an IRA, you have two options — a traditional IRA or the newer Roth IRA. The tax treatment of your contributions and withdrawals will depend on which option you select. Also, you should know that the after-tax value of your withdrawal will depend on inflation and the type of IRA you choose.

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 Now, Set Goals, And Stick To Them

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. Remember, it's never too early or too late to start saving. So start now, whatever your age!

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.

Ask Questions

These tips point you in the right direction. But you'll need more information. Talk to your employer, your bank, your union, or a financial advisor. Ask questions and make sure the answers make sense to you. Get practical advice and act now.

Financial security doesn't just happen. It takes planning and commitment and, yes, money.

Facts

• The average American spends 18 years in retirement.
• In 2005, of those who had 401(k) coverage available, 25 percent didn't participate.
• Today, only 42 percent of Americans have calculated
  how much they need to save for retirement.

Putting money away for retirement is a habit we can all live with.
Remember — Saving Matters!

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