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Ask Yourself: Are You Prepared for Retirement?

March 2008

We all want a comfortable retirement that allows us to maintain our lifestyles with a minimum of worry. As the baby boomers get older, planning for that comfortable retirement becomes vital and, according to experts, the sooner we start the better. But how do you plan and save for a retirement that can last more than twenty years? What can you do now to ensure that you will have enough money for the retirement you would like to have?

The first step is to take a look at the savings you will have available when you are ready to retire and your retirement benefits. If you haven't done so yet, you have lots of company.

A study of 2,500 people, ages 45 through 64, found that 71 percent were worried about having enough money for their retirement. The study, commissioned by Thrivent Financial for Lutherans, also found that while 56 percent believe they'll have a standard of living in retirement as good as or better than their parents had, only about 4 in 10 have attempted to calculate their retirement savings needs. The rest, almost 60 percent, have not done any serious calculations about retirement

Experts suggest you start your retirement planning by asking yourself:

1. How much money will you need to save for a comfortable retirement?
2. Which benefits are you qualified to receive in retirement from current and former employers?
3. Is your latest Social Security statement accurate? If not, have you contacted the Social Security Administration with corrections?
4. If you are eligible for a traditional benefit pension, can you get a written list of your payment options from your employer? How far in advance do you need to apply?
5. Have you accounted for all the 401(k) plans you may have had at various employers?
6. What are your options for getting distributions from your 401(k)? Are there any tax consequences?
7. If you plan to retire before you qualify for Medicare, have you checked on the cost and coverage options available in the private market? Do you qualify for extended health insurance under the COBRA law, which allows many workers to extend their employment-based health insurance for up to 18 months after they leave a job?
8. Do you currently qualify for employer-provided health benefits in retirement, such as Medicare supplemental insurance? How much will they cost?
9. Does your employer provide other benefits, such as long-term care insurance, that you can buy before you retire and maintain once you have left your job?
10. Do you have a will?

The U.S. Department of Labor's Employee Benefits Security Administration publishes "Taking the Mystery Out of Retirement Planning," a booklet to help calculate the financial resources people will need to ensure a secure retirement. Call 1-866-444-3272 for a free copy.

AARP also has online tools to help plan for a comfortable future.

Barbara E. Riley