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Women who are currently working are much more likely to receive a pension
when they retire than previous women workers. But, like women who are
already retired, their pension coverage will probably continue to be only
half the amount men receive. Future retirees will have to rely more heavily
on employer-provided pensions and personal contributions to these plans
than previous retirees.
It is estimated that by 2030:
- 29 percent of retirees will receive
30 percent or more of their total income from pensions.
- half of single women will receive
11 percent or less of their total incomes from pensions.
- pensions will form a much larger
part of total retirement income for those with a college degree.
Some of the best retirement plans available may be offered where you work.
In addition to a traditional pension plan, your employer may offer a retirement
savings plan such as a 401(k) or 403(b) plan that can provide extra retirement
income and tax benefits that far outweigh those available from a typical
Individual Retirement Account (IRA).
Not only do many employers match a percentage of the dollars you invest
in the plan, but your contributions also reduce your federal taxable income
dollar for dollar, and the profits you earn grow untaxed (tax-deferred)
until you withdraw them. Yet many people often don't take advantage of
this exceptional opportunity.
- Only 57 percent of those eligible
contribute to employer provided 401(k)s or 403(b) retirement plans.
- 83 percent of people earning $25,000
or less per year do not contribute to 401(k)s or 403(b)s.
- Only 12 percent of self-employed
individuals have Keogh plans.
Several steps, taken now, will help pave the way to financial security.
- As soon as you are eligible, put
money away regularly in a tax-deferred account. It is the simplest and
most effective way to plan for your financial future.
- Sign up for your company's 401(k)
or 403(b) plan and contribute the maximum allowed.
- Learn as much as possible about
your pension benefits.
- If you are self-employed, establish
a Keogh or simplified employee pension (SEP) retirement plan.
- If your employer does not have
a pension plan, ask that he or she establish a SEP.
Ideally, retirement planning should begin early in your working life.
No matter how many working years you have before you retire, knowing your
potential retirement benefits from your pension(s) helps determine when
you can afford to retire and maintain your present lifestyle.
Employees who do not investigate and monitor their pension plans are
more likely to make mistakes that may seriously affect the availability
and size of their pension benefits.
Use the What Do You Know about Your Pension
Plan? worksheet to help you organize your pension information.
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