Top 10 Ways to Beat the Clock and Prepare for Retirement

Top 10 Ways to Beat the Clock and Prepare for Retirement Instead of going online, you can get any Employee Benefits Security Administration publication listed here by calling the U.S. Department of Labor at 1-866-444-3272. There is no charge. (Note that IRS Publication 590 comes from the IRS, not EBSA.)

10. Know Your Retirement Needs
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. Take charge of your financial future.

9. 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 Social Security Statement and find out more about your benefits at www.socialsecurity.gov.

8. 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.

7. 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.

6. 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 employee pensions, you can order Internal Revenue Service Publication 590, ?Individual Retirement Arrangements (IRAs),? by calling 1-800-829-3676 or go to www.irs.gov/pub/irs-pdf/p590.pdf.

5. Put Money Into an Individual Retirement Account
You can put up to $4,000 a year into an Individual Retirement Account (IRA) and gain tax advantages.

The Advantage of Starting Early

Start now! This chart shows what you would accumulate after 5, 15, 25, and 35 years if you saved just $3,000 each year and your money earned 7% annually.

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.

4. 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.

3. 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 saving a high priority. Devise a plan, stick to it, and set goals for yourself. Remember, it's never too late to start. So start now, whatever your age.

2. Consider Basic Investment Principles
How you save can be as important as how much you save. Inflation and the types 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.

1. Ask Questions
These tips should point you in the right direction, but you'll need more information. Talk to your employer, your bank, your union, or to me, Steve Robbins, your Certified Financial Planner? Professional. This is what I am here for. Ask questions and make sure the answers make sense to you. Get practical advice and act now.

Quick Facts
FACT: In 2004, only 42 percent of Americans had calculated how much they needed to save for retirement.
FACT: In 2001, of those who had 401(k) coverage available, 30% didn't participate.
FACT: The average American spends 18 years in retirement. 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.

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

For additional advice, you can also visit the Social Security Administration website at www.ssa.gov.