Top Ten Ways to Beat the Clock and Prepare for Retirement

(Reprinted from a booklet published by the United States Department of Labor)

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Financial security doesn't just happen, it takes planning, and commitment, and yes, money.

Fact: Less than half of Americans have put aside money specifically for retirement.

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.

Fact: In 1993, of those who had 401(k) coverage available, one-third didn't participate.

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.

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.

1. KNOW YOUR RETIREMENT NEEDS.

Retirement is expensive. Experts estimate that you'll need 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.

2. FIND OUT ABOUT YOUR SOCIAL SECURITIES 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).

3. 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 202-219-8776.

4. 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.

5. 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, order Internal Revenue Service Publication 590 by calling 1-800-829-3676.

6. PUT MONEY INTO AN 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.

7. 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.

8. 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.

9. 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.

10. 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.

HOW TO FIND OUT MORE

Here are sources of information to help you prepare for retirement.

Pension and Welfare Benefits Administration

U.S. Department of Labor

202-219-8776

Social SecuritY Administration

1-800-772-1213

Internal Revenue Service

1-800-829-3676

Besides these government agencies, many private organizations may be helpful. For additional information, you may want to contact one of the following groups:

American Association of Retired Persons

202-434-3525

American Council of Life Insurance

1-800-705-ACLI

American Federation of Labor/Congress of Industrial Organizations

202-637-5202

American Federation of Teachers

202-879-4400

American Institute of Certified Public Accountants

201-938-3990

Commission on Saving and Investment in America

202-637-0110

Employee Benefit Research Institute

202-775-6338

Investment Company Institute

202-326-5800

National Education Association Member Benefits Corporation

1-800-637-4636

Pension Rights Center

202-296-3779

It's Never Too Late to Start

Start young. A look at the performance of $2,000 retirement plan investments over time at 4% shows the value of starting early.

$125,000
                                                X
$100,000                                        X
                                                X
 $75,000                                        X
                                                X
 $50,000                              X         X
                                      X         X
 $25,000                    X         X         X
                            X         X         X
      $0          X         X         X         X
          AGE:   30        40        50        60
             $2,000   $24,012   $59,556  $112,170

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