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Retirement is expensive. Experts estimate that you'll need about 70% of your
pre-retirement income-lower earners, 90% or more - to maintain your standard
of living when you stop working. Understand your financial future.
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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).
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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 1.866.444.3272.
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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.
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If your employer doesn't offer a retirement plan, suggest that he/she start
one. Simplified plans can be set up by certain employers. For information on
simplified employee pensions, order Internal Revenue Service Publication 590
by calling 1.800.829.3676.
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You can put $2,000 a year into an 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. IRS
Publication 590 contains information about IRAs.
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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.
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Start early. The sooner you start saving, the more time your money has to
grow. Put time on your side. Make retirement saving a high priority. Devise
a plan, stick to it, and set goals for yourself. Remember, it's never too
late to start. Start saving now, whatever your age.
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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.
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These tips should 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.
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Financial security doesn't just
happen, it takes planning, and commitment, and yes, money.
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Less than half of Americans have put
aside money specifically for retirement.
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You can't retire with security
unless you really prepare for it. That means facing up to reality, and
beginning to take action for tomorrow as well as today.
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In 1993, of those who had 401(k)
coverage available, one-third didn't participate.
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Putting away money for retirement is
like giving yourself a raise. It's money that gives you freedom when
you want it-and deserve it.
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The average American spends 18 years
in retirement.
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Today, half of Americans guess when
determining their retirement needs. Don't be one of them. Find out
more. Save now and beat the retirement clock.
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