Women and Retirement
Planning and saving for retirement may seem like a goal that's far in the future. Yet saving, especially for retirement, should start early and continue throughout your lifetime. Here are four reasons why saving matters for women -- and especially for you!
Do you know?
START HERE...START NOW
Here are eight questions to help you think about retirement and take charge of your financial future:
Do you work for an employer that offers a pension plan?
Have you worked at the job long enough to earn a pension?
Too often employees, especially women, quit work, transfer to another job or interrupt their work lives just short of the time required to become vested. Ask the personnel office, pension plan administrator or union representative about the vesting period and other details of your company pension plan.
Do you keep copies of the documents that define the provisions of your pension plan?
Also remember to keep pension-related records from all jobs. They provide valuable information about your benefit rights, even when you no longer work for a company.
What happens to your pension if you change jobs?
A word of caution: If you receive your pension in a lump sum, you will owe additional income taxes, and may owe a penalty tax. A better way is to reinvest your savings in another qualified pension plan or an Individual Retirement Account (IRA) within 60 days. You avoid tax penalties and you keep your long-term retirement goals on track.
If you do want to reinvest the money, it is important that you do not directly receive it. If you receive the money directly, you will have to pay a 20 percent withholding tax on the amount you receive and then file for a refund in the next year, providing proof that you have transferred the funds to an IRA. Instead, you should instruct the pension plan to transfer your pension money directly to an IRA or other qualified pension fund you have established. This is easy to do using simple forms supplied by the new plan. If you want help with the forms, representatives of the plan are generally available to assist you.
Do you know how you can save for retirement even if you don't belong to an employer-sponsored pension plan?
Are you tracking your Social Security earnings?
In addition, you may be eligible for Social Security benefits through you husband's work and can receive benefits when he retires or if he becomes disabled or dies. Special rules apply if you and your husband have been employed and both have paid into Social Security. Special rules apply also if you are divorced, or if you have a government pension. To calculate your benefit estimate, visit the Social Security Administration's Web site at www.ssa.gov/retire/
Are you entitled to a portion of your spouse pension benefit if you and your husband divorce?
Are you aware of the rules that govern your pension plan and the pension plan of your spouse if either of you dies?
If you are a beneficiary under your spouse's defined benefit pension plan, you may want to request a copy of the SPD and other plan documents that describe your spouse's vested benefits. You will probably want to make the request in writing, and you may be charged a fee for the information.
The rules may be different if you or your spouse participate in a defined contribution plan. Consult the plan administrator for details about spousal rights.
IT UP TO YOU!
Once you've answered these questions, you're on the road to learning more about financial freedom. As a resource for women (and men), the Employee Benefits Security Administration has issued Savings Fitness: A Guide to Your Money and Your Financial Future. The booklet includes a resource and Web site section (see the Resources section to get a copy).
Employee Benefits Security Administration
Select from the brochures below and view them on the Web or request them and a list of all available publications from the hotline number above:
Top 10 Ways to Beat the Clock and Prepare for Retirement
QDROs -- the Division of Pensions through Qualified Domestic Relations Orders
Savings Fitness: A Guide to Your Money and Your Financial Future
Social Security Administration
Pension Benefit Guaranty Corporation Request
U.S. Securities and Exchange Commission
American Savings Education Council
This is for educational purposes only. The information provided here is intended to help you understand the general issue and does not constitute any tax, investment or legal advice. Consult your financial, tax or legal advisor regarding your own unique situation and your company's benefits representative for rules specific to your plan.
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