START PLANNING TODAY USING THIS RETIREMENT INCOME CHECKLIST

Like many of us, you may dream of the day when you can stop working and enjoy a comfortable

retirement. This checklist provides you with some important choices to consider in order to

make wiser decisions through your working years and your retirement years.

􀀹 How much will you need? Make an estimate of how much monthly or annual income you will need in retirement.

􀀹 What are your sources of retirement income? Think about what sources of retirement funds will be available and how much you will receive from each, including Social Security, employer retirement plans and your own personal savings.

􀀹 How long will you live? In planning for retirement, it is important to consider how long you might live. While on average people who reach 65 live into their 80s, a few live to 90 and beyond.

􀀹 What if your spouse dies first? If you are married, find out which benefits will continue

if you or your spouse should die first.

􀀹 How will the cost of living change in the future? When you estimate your retirement income needs, remember to include the impact of inflation. Costs are likely to rise each year, and the impact of these increases over time can be quite large.

􀀹 How will you pay for healthcare? Consider how you will pay your medical bills. Are you eligible for Medicare or other medical insurance?

􀀹 How do you handle the unexpected? Be sure to take into account how you would handle potential emergencies, such as home repairs, unexpected medical bills or family emergencies.

􀀹 What if you need assistance in your retirement? Consider how your retirement income would be affected if you needed long-term care, assistance at home or special housing.

􀀹 What will you do in your golden years? If you have specific plans for retirement, such as travel, consider how you plan to pay for it.

􀀹 How will you manage your retirement money? Consider how you will be able to manage your funds and what the right mix of investments is for your retirement needs. 

Investments include stocks, bonds, annuities, money market funds, your home, other real

estate and other savings.

􀀹 Have you thought about estate planning? Estate planning is an important part of your plan for retirement. Seeking expert advice in this area can greatly assist you.

10 Ways to Become Financially Wiser!

This checklist is drawn from the work of the Committee of Post-Retirement Needs and Risks of the Society of Actuaries and the content and recommendations in the report, “Public Misperceptions about Retirement Security,” published in 2005 by LIMRA International, Inc., the Society of Actuaries, and Mathew Greenwald & Associates, Inc. The Committee has identified the areas in which the public does not understand the realities of retirement planning and that serve as barriers to individuals creating a good solution in this era of individual responsibility. © Women’s Institute for a Secure Retirement April 2007

Today’s vs. Tomorrow’s Income Security

Times have changed since the “three-legged stool” was conceived. Over the last several decades, women’s labor force participation has increased dramatically. Today, the majority of women in every age group are in the labor force. Unfortunately, our retirement income system has not responded to the change in the composition of the workforce, and this is one of the primary reasons why the traditional three-legged stool of retirement is so wobbly for women. Even though women have worked in some capacity their entire adult lives―raising children, caring for an ill parent, as well as joining the paid labor force either full- or part-time, millions of women find themselves with few financial resources when they look toward the future, and many are vulnerable to the real possibility of poverty in their retirement years. It is clear that without significant changes, women’s work patterns and caregiving responsibilities will continue to place them at a disadvantage in our nation's retirement system. As long as women earn less, live longer, and experience more interruptions from paid work and work in the types of jobs that do not provide benefits, the bleak retirement picture will remain largely the same, and retirement security for millions of women retirees will remain elusive. While we can hope that public policymakers will adopt changes to prevent poverty in old age, there are things women can do to seize control of their own economic future and make the most of the existing system. Our goal at WISER through the distribution of this book is to educate as many women as we can reach, to provide them with the knowledge they need to take meaningful steps toward controlling their financial future.

Private pensions and retirement savings plans

such as 401(k) or 403(b) plans are the second leg of the retirement stool. They are a valuable part of a retirement income package, but they are not always available to women. Less than one-third of retired older women today receive pension income. And the situation is not improving. Less than half of working women have access to a private pension or retirement plan at their jobs. Additionally, women often leave jobs before vesting in a pension benefit, and because the dollar amounts they receive are smaller, they tend to spend all or part of any lump sum distribution they receive from 401(k)-type plans. The third leg of the retirement security stool is individual savings. Because of the changing nature of employer-provided pensions and savings plans, women must save on their own and save more than men—not only because they live longer, but also because they are more likely to have higher expenses for health care, long-term care and prescription drugs. Unfortunately, 9 women’s lower average earnings and more time out of the workforce for caregiving make it difficult for them to save the amounts needed for retirement.

Private pensions and retirement savings plans

such as 401(k) or 403(b) plans are the second leg of the retirement stool. They are a valuable part of a retirement income package, but they are not always available to women. Less than one-third of retired older women today receive pension income. And the situation is not improving. Less than half of working women have access to a private pension or retirement plan at their jobs. Additionally, women often leave jobs before vesting in a pension benefit, and because the dollar amounts they receive are smaller, they tend to spend all or part of any lump sum distribution they receive from 401(k)-type plans. The third leg of the retirement security stool is individual savings. Because of the changing nature of employer-provided pensions and savings plans, women must save on their own and save more than men—not only because they live longer, but also because they are more likely to have higher expenses for health care, long-term care and prescription drugs. Unfortunately, 9 women’s lower average earnings and more time out of the workforce for caregiving make it difficult for them to save the amounts needed for retirement.

The Three Legs of the Stool

Many older women rely on Social Security as their primary or only source of retirement income—it keeps almost 40 percent from falling into poverty. However, Social Security replaces only 40 percent of an average worker’s wages. That 40 percent is not enough alone, and the fact that they are without other sources of income such as pensions or savings is one of the major reasons why so many older women live at poverty’s door.

What Types of Index Funds Are Out There?

Just as there are several indices that track stock market activity, several varieties of index funds exist. You can buy shares of index funds that only invest in the 30 stocks of the Dow Jones Industrial Average, but while these companies are some of the biggest and most reliable blue chips in the world, a portfolio with only 30 stocks in it isn’t going to provide you with true diversification in case huge companies fall out of favor. Instead, most investors gravitate toward S&P 500 index funds, which include 500 stocks ranging from the global giants to somewhat smaller or more specialized companies. Some of the lowestpriced mutual funds in the market are S&P 500 index funds. If you’d like even better diversification, you can buy into index funds that invest in broader slices of the stock market, including a greater number of smaller companies in their portfolios. Some index funds reflect the Nasdaq Composite, while others track the Russell 3000 index and still others broaden their horizons to the entire Dow Wilshire 5000 equity index, which invests in practically every major publicly traded U.S. stock.