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Don’t gamble your pension away





If you are over 50 years of age and preparing for retirement, the current economic turmoil may be causing you more than a few sleepless nights.  Having a sound financial plan for the future, following a budget, and living within your means are sure-fire ways to set your mind at ease.




Retirement planning




You can never start too soon with planning for your golden years, but even if you are within sight of your retirement, you can take steps to build a nest egg for yourself.




Decide when you want to retire and what you want to do with your time.  If you have been saving and investing for some time, you may be able to take an early retirement without difficulty.  If your savings are still wanting, you may want to aim for age 62 at a minimum, or the standard of age 65, and continue to work, save and invest until then. 





It is important to know how much your monthly income will be after your retirement.  Pension benefits from past employers, work and personal investments, and Social Security payments all factor in your expected monthly income. Pension benefit and investment statements can be obtained from your employer or financial adviser, and the Social Security Administration can provide projected benefit statements, which estimate your monthly Social Security payments and give you a better idea of how much you will get per month – and how much you will need to save until retirement.




You can free up extra money to invest for your retirement by simply cutting the cost of your daily expenses.  Making your daily coffee instead of buying it, clipping coupons and taking advantage of specials can make a big difference now and in the long run.




Investing in your retirement




Employers frequently invest pension funds into accounts using 401(k) plans, but there are a wide variety of accounts, funds and pension plans that you can invest in and collect interest on, for your retirement. 





One of the most popular is the Individual Retirement Account or IRA.  The most common type is the Traditional IRA. You can deposit up to $5000 per year into the account, $6000 per year if you are over 50. These deposits are tax deductible for the year you contributed it and the money is invested in mutual funds, bonds and index funds. Roth IRAs differ from traditional in that contributions and interest are taxed now and not upon withdrawal.  You can also withdraw money from a Roth IRA anytime, even before retirement age, and can bequeath it to a relative tax-free.  You can also transfer retirement assets, such as 401(k) plans, into Rollover IRAs and avoid taxes and penalties in the process.




While people look forward to their retirement, planning what they want to do and where they would like to go, thinking about finances is something they would rather put off.  This kind of gamble can be a dangerous one, but taking the time to make a plan and following through will mean you get to reap the rewards in the future.




After all, if you are going to gamble, do it with money you can afford to lose. A retirement plan will ensure you can try your luck on the slots at your favorite casino worry-free.






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