Newark, N.J. – America is preparing for one of the most significant demographic shifts of our time as the oldest of the 76 million baby boomers reach retirement age. Before retiring, there are many important decisions that need to be made, which can leave many people uncertain about where to start. To help Americans clearly focus on the basics, Prudential Financial (NYSE:PRU) has identified six important financial considerations to think about before retiring.
“Just as the boomer generation has redefined history and culture, they will also change the nature of living in retirement,” Jill Perlin, vice president, Prudential’s Retirement and Wealth Planning group. “Boomers and younger workers who understand what to do – and take action – before they leave the workforce may have many more choices available to them during their retirement years.”
The Top Six
- Define your retirement – determine what retirement means for you, which will drive how you’ll need to plan for it. Decide if you want to work part-time or launch a completely new career - or perhaps, go back to school, volunteer or develop new hobbies. Consider if you will want or need to downsize, relocate or remain in your current residence.
- Know where you stand financially – Take inventory of your assets and possible income sources. Understand your retirement plan and how it will pay you during your retirement years. Start saving money as early as possible and set aside as much as possible. Take advantage of workplace-provided retirement plans, and if your company offers a match, make sure you’re setting aside enough to fully qualify. Consider increasing your contribution rate with promotions and pay raises, and—if you’re over 50—don’t forget about “catch-up” provisions.
- Estimate your expenses in retirement, especially for healthcare – healthcare can be a significant expense category during your retirement years, so understanding what your healthcare plan covers in retirement is critical.
- Manage asset allocation – regularly monitor and review your investments to ensure that they support your goals and to determine if you should change how assets are allocated among different investment types; consider professionally managed investments products.
- Plan for your beneficiaries – create a will, choose a guardian if needed, and select who will manage your estate.
- Explore options to create a retirement income – research product strategies that can help generate a guaranteed retirement income stream, including the new generation of variable annuities that can provide guaranteed streams of income for life while still affording degrees of flexibility and control. It may be advantageous to purchase these products while you are still working.
“People who are nearing retirement need to think about how to grow, protect, and convert their assets into retirement income – and that can take some time,” said Perlin. “Being engaged in this process while still working allows boomers more flexibility to course-correct, if necessary.”
Mark Hug, chief marketing officer for Prudential’s Individual Life Insurance business, added that there are a number of tools that can help boomers transfer money to their beneficiaries.
“Transferring wealth is a critical part of retirement planning. Estate planning, in particular, can be an efficient way to distribute the maximum amount possible to your beneficiaries at the time of your death. Added benefits like reducing estate taxes enhance the value of incorporating estate planning into your overall planning for retirement.”
And according to Jim Mahaney, vice president, Prudential Retirement, taking these tips into consideration while still in the workforce allows pre-retirees to benefit from existing employee-sponsored retirement plans. “New approaches to defined contribution plans, such as ‘autopilot’ features, make participation in company-sponsored retirement savings plans easier. Also, those nearing retirement should consider the possibility of delaying Social Security by using defined contribution or IRA assets to bridge to a higher initial Social Security amount. That could allow them to benefit from higher Social Security cost-of-living increases throughout their retirement.”
For more information about important retirement considerations and choices, review and download a copy of The Fourth Pillar: Retirement Choices brochure at Prudential’s website, www.prudential.com.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $637 billion of assets under management as of September 30, 2007, has operations in the United States, Asia, Europe, and Latin America. Leveraging its heritage of life insurance and asset management expertise, Prudential is focused on helping individual and institutional customers grow and protect their wealth. The company’s well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. Prudential's businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. For more information, please visit www.prudential.com.
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