Preparing for Retirement

A plan for the rest of your life

Women face unique challenges when it comes to retirement planning. Not only do they live longer than men, and face retirements that can last an average of 4-5 years longer than men’s, but they have traditionally participated less in company retirement plans and Social Security. Because of this, women need more robust retirement plans because they usually have less set aside than they should.

As retirement approaches, important financial and lifestyle decisions may seem to rush at you, including:

  • Deciding whether to downsize to a smaller home or move to a new location
  • Evaluating choices for a retirement plan rollover
  • Generating predictable retirement income
  • Protecting your portfolio and income

The keys to success are smart planning and anticipating each decision well in advance.

How will you start your retirement planning?

Take a few minutes from your busy life, and picture your retirement in your mind:

  • What kinds of things are you doing?
  • Where are you living?
  • How old are you?

Visualizing your retirement may be an important first step toward achieving your dreams, but the key words are “first step”—your ideal retirement will not just happen on its own. You need to dream it, plan for it, and then implement your plan.

Know your retirement income needs

Most experts agree that, on average, retirees will need about 80 percent of their preretirement income to live comfortably during retirement. For example:

Annual pre-tax salary before retirement: $75,000
Retirement income needed to continue standard of living: $60,000

With proper planning, you can accumulate the money you will need—but you have to start now. The cost of waiting—even for a single year—is simply too high:

Save early, save often, and allocate

If you want to look forward to a secure retirement, the time to plan—and save—is now. The sooner you start saving, the easier it will be to accumulate wealth for your retirement:

You will also want to practice solid investment management with asset allocation. In other words, make sure you distribute your assets among a variety of investment vehicles.

Know your financial planning options

For most people, retirement will be funded by personal savings, Individual Retirement Accounts (IRAs), self-funded retirement plans, and products such as:

  • Employee-sponsored 401(k) and 403(b) Plans
  • Fixed and variable annuities
  • Life insurance cash values

Start planning for your retirement now by:

  • Taking advantage of a tax-deferred plan such as an IRA
    IRAs are easy to establish and maintain. Nearly anyone who earns an income can contribute on an annual basis, and your entire contribution is tax-deductible on your income taxes regardless of how much you earn (provided you or your spouse do not actively participate in an employer-sponsored retirement plan).
  • Exercising restraint
    Once you’ve put money away, leave it alone. The government imposes strict penalties on money you take out of tax-favored retirement plans, in addition to making you pay income taxes on it.
  • Learning all you can
    With 401(k) and other self-funded plans, you determine how your money is invested. By applying some basic investment strategies, you’ll have a better shot at achieving your retirement goals.

Insure your worth

Do you consider health and homeowner’s insurance an important part of your financial safety net? Most women do. But to make sure your safety net is secure, consider three other types of insurance:

You also may want to think about working with a Financial Professional. He or she can help you map out your plan and stick to it.

Now, learn about how to live well in retirement.

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