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1
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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. Understand
your financial future.
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2
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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 Personal Earnings and
Benefit Estimate Statement (PEBES)
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3
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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. For a free booklet on private
pensions, call the U.S. Department of Labor at 1-800-998-7542
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4
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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,
deferral of taxes and compounding of interest make a big difference in the
amount of money you will accumulate. |
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5
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Ask your employer to start a plan. |
| 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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6
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Put money into a Individual Retirement Account. |
| 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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7
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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.
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8
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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. Start saving now, whatever your age. |
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9
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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. |
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10
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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 a financial
advisor. Ask questions and make sure the answers make sense to you. Get
practical advice and act now.
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