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Retirement TO-DO-LIST |
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Retirement Strategies for All Ages: A "To-Do" List
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A successful retirement
depends largely on the steps you take during different stages of your
life. Here are some moves to consider. Note: Investment portfolios shown
are illustrations only. You must decide what percentages and investments
are right for you.
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Your 20s and 30s (Early Career)
Contribute as much as you can to IRAs, 401(k)s, Keoghs and other
retirement savings while meeting other goals, such as buying a home or
starting a family.
Keep your debt from credit cards and other sources manageable.
If you don't already own a home, consider if this is a good option for
you. While a home purchase can be expensive, it also can be an excellent
investment and source of tax breaks.
Given your years until retirement, you probably can afford to be fairly
aggressive with your investments. Possible portfolio: 60 to 80 percent
in stocks or stock mutual funds and most of the rest in certificates of
deposit (CDs), bonds, bond funds or money market accounts.
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Your 40s and 50s
(Mid-Career)
Continue putting as much as you can into IRAs, 401(k)s, Keoghs and other
retirement savings accounts. Once you reach age 50, you can make
"catch-up" (extra) contributions to IRAs, 401(k)s and other retirement
savings accounts.
If you haven't bought a house already, consider doing so as a source of
equity and a place to live in retirement. If you have a mortgage,
periodically compare your interest rate to current market rates. If
current rates are better, consider refinancing.
As you get closer to retirement, consider reducing stock investments and
adding more conservative, income-producing investments. Possible
portfolio: 50 to 70 percent in stocks or stock mutual funds and most of
the rest in CDs, bonds, bond funds or money market accounts.
Your Early 60s (Late Career)
Ask the Social Security Administration, your accountant or your
employer's personnel office to help you determine how much Social
Security and pension income you'd get if you "retire early" – and how
much you'd lose compared to holding off on retirement (see Helping Your
Money Last...).
Discuss with a financial advisor when to withdraw money from your
tax-deferred retirement accounts, such as employer-sponsored retirement
plans and traditional IRAs. After age 59 ½, you can withdraw your money
without penalty but subject to income taxes. Under IRS rules, you must
withdraw a minimum amount from 401(k)s, traditional IRAs and certain
other retirement savings plans by April 1 of the year after you reach
age 70 ½ and each year after that. There is an exception to the rules
for someone still working for the employer who sponsors the plan.
Consult with your legal or financial advisors about estate planning –
organizing your financial affairs so that your money, property and other
assets can go to your heirs with a minimum of costs, taxes and hassles.
You may need or want to buy health insurance or long-term care
(including nursing home) insurance. Consider the need for disability
(wage replacement) or life insurance coverage.
Reduce your consumer debt as much as possible and consider the pros and
cons of paying off your mortgage early. But if you think you'll need to
borrow money during retirement, determine whether you want to refinance
your mortgage, take out a home-equity loan, apply for a credit card or
otherwise take out a loan before you retire. You might have more options
for getting a loan when you still have employment income. No matter what
loans you have or how old you are, it's important to keep your debts
manageable.
Consider reducing your stock ownership and increasing your conservative
investments. Possible portfolio: 30 to 60 percent in stocks or stock
mutual funds and most of the rest in CDs, bonds, bond funds or money
market accounts.
Your Retirement
The rules governing retirement can be complicated. So, about a year
before you plan to retire, discuss your situation with a Social Security
Administration claims representative. After you decide on a retirement
date, apply for your Social Security benefits and other pensions about
three months in advance. If you plan to work part-time, find out how
this will affect your Social Security income or taxes.
Arrange to have your periodic payments, such as Social Security
benefits, directly deposited into your checking account. Ask your
personnel department or financial advisor about whether to receive your
401(k) money in a lump sum or periodic payments.
Reduce your debts as much as possible. Be careful before taking on new
debt, such as a home-equity loan or a reverse mortgage (see Helping Your
Money Last...).
Lean toward conservative, income-producing investments, but don't rule
out stocks or stock funds. Possible portfolio: 20 to 40 percent in stock
or stock mutual funds and most of the rest in CDs, bonds, bond funds or
money market accounts. |
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Retirement TO-DO-LIST |
WWWRETIREMENTCOM
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