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Don't Run With Your Retirement Money

Understanding Your Resources and How Best to Use Them

A joint project of The Actuarial Foundation and WISER, the Women's Institute for a Secure Retirement

WISER

THE WOMEN'S INSTITUTE FOR A SECURE RETIREMENT

Acknowledgements

WISER and The Actuarial Foundation gratefully acknowledge the following individuals for lending their time and expertise to this project:

Anna Rappaport (Chair); Joe Applebaum; Carol Bogosian; Mort Dickstein; Karen Holden; Pat Humphlett; Alison Kane;

Pamela Perun; Trip Reid; Zenaida Samaniego; Dick Schreitmueller (Editor); Vinaya Sharma; Eric Sondergeld;

and Kathy Stokes Murray.

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Finding money to set aside for retirement can be a big challenge. Once you have money put away, you want to learn how to make the most of it. This booklet is intended to help you understand the

things you need to consider, and how to avoid pitfalls as you transition to retirement status, however you define it.

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This booklet is intended to provide general information and should not be used as a substitute for legal or other professional advice.

Don't Run With Your Retirement Money

Understanding Your Resources and How Best to Use Them

Introduction 1 .................................................................................................................................... What Are Your Sources of Retirement Income? 2 ......................................... What Are Your Needs? 6 ......................................................................................................... What's Your Best Way to Take Money Out?................................................10 Conclusion 24 ..................................................................................................................................... Appendix 25 ........................................................................................................................................

Introduction

A s a worker today, you have a lot of responsibility for retirement planning. The growing availability of retirement savings programs, like 401(k) plans and IRAs, offers important opportunities to build savings, but they also require knowledge and attention. At the same time, traditional pensions that don't require a lot of knowledge and attention from workers are becoming less common, making 401(k) plans not just nice-to-have, but critical to financial security in retirement. In the midst of these changes, Social Security faces challenges of its own, leaving in question what the benefits will be and when they will be available to you and the rest of the nation's future retirees.

Just as important as building your retirement savings, however, is figuring out how to manage the money available to you when you do retire. Unfortunately, not enough attention has been paid to this part of the retirement planning process. This guide intends to help fill the gap, giving you information to help you make wiser choices as you transition to retirement status. (Although "retirement" can have many meanings, we'll simply consider it to be the point in your life when you move from building up retirement funds to drawing them down.)

We've divided the guide into three sections: taking stock of what's available to you, understanding what your needs will be during your retirement, and determining how best to meet them.

So read on to help understand the choices you will have and the options available to you as you plan for that time known as retirement, however you choose to define it.

PITFALL: KEEP AN EYE OUT FOR POSSIBLE "PITFALLS" THAT ARE IDENTIFIED BY THIS ICON.

Understanding Your Resources and How Best to Use Them

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