A Timetable to Prepare Yourself for Retirement

Countless surveys have shown that retirement planning is a top concern of many investors. But how do you go about doing it?

The answer depends in part on how old you are and how close you are to retirement. What you might do at age 64 is different than what you might do at 40. Nonetheless, no matter your age, you should do something.

“Retirement planning is something people should begin planning right when they begin their careers,” says Jonathan D. Pond, president of Financial Planning Information Inc., a Watertown, Mass., firm that publishes financial planning information. “It’s a lifetime process, and the sooner you start, the better.”

The following retirement planning timetable, prepared by Pond, should help. In future columns we will discuss some of the specific issues it raises:

DURING ALL YOUR WORKING YEARS

* Recognize the need to regularly set aside sufficient savings to provide for your retirement.

* Make sure you always have adequate and continuous insurance coverage.

* Consider the effect on your future pension benefits of any contemplated job change. Job hopping can curtail your pension benefits severely.

* Roll over any vested pension benefits that you or your spouse receive as a result of a job change into an individual retirement account or other tax-deferred retirement plan.

BEFORE AGE 40

* Contribute regularly to an IRA or other retirement fund.

* Purchase or begin saving for a home so that by the time you retire, your housing costs will be under control.

* Discuss the fine points of your pension plan with your company’s benefits officer.

AGE 40-49

* Periodically check with the Social Security Administration by requesting and filing Form SSA-7004. You will receive a “Personal Earnings and Benefit Estimate Statement” to verify that your wages are being properly credited to your account and to prepare retirement income projections.

* Analyze your personal assets and work out a plan for funding an adequate retirement income.

* Actively manage your IRA and other retirement funds, with appropriate emphasis on capital gains-oriented investments.

* Make a will and review it every three years or when moving to another state. Also prepare other important estate planning documents.

AGE 50-59

* Continue to request your Social Security “Personal Earnings and Benefit Estimate Statement” periodically.

* Review your status with your company’s pension plan regularly.

* Revise your retirement income and expense projections, taking inflation into consideration.

* Make sure the beneficiary designations on your life insurance policies are appropriate.

* Start gradually shifting some of your IRA and other retirement-earmarked funds into lower-risk investments.

* Join the American Assn. of Retired Persons to take advantage of their many sources of information and help. The address is: AARP, 1909 K St. N.W., Washington, D.C. 20049.

AGE 60-64

* If you are contemplating early retirement, evaluate thoroughly the advantages and disadvantages.

* Collect the documents necessary to process Social Security benefits: both spouses’ Social Security cards, proof of both spouses’ ages, a marriage certificate and a copy of your latest W-2 income tax withholding statement.

* Before taking any major actions, such as selling a house, weigh the merits of waiting until 65, when many special breaks are available.

* Determine the status and duration of ongoing commitments such as mortgages and loans.

* Prepare detailed cash flow projections from your estimated year of retirement until age 90, taking inflation into consideration.

* Practice living for a month under your planned retirement income.

* Consider different retirement locations. If a location other than your present home is chosen, try living there for a while before making the move.

JUST BEFORE RETIREMENT

* Establish what your retirement income will be, and estimate as closely as possible your retirement living costs.

* Determine exactly what your pension benefits will be and whether you want to receive them as a lump sum and/or use them to purchase an annuity.

* Arrange for a continuation of your medical insurance coverage or, if you are 65 or over, arrange for supplemental Medicare coverage.

* Register with the Social Security Administration at least three months before retirement.

* Inquire about possible entitlements to partial pensions from past jobs.