S&P's Financial Focus

Retirement Planning

Retirement may seem as far away as another galaxy, yet now is the time to start planning. Do you want to retire at age 40? At age 65? Whatever your goal, the sooner you start investing, the easier it will be to reach your goal. For example, if you want to have $1 million by age 65, you need to start saving $127 per month at 11 percent interest by the age of 25. Putting money aside for retirement is important to your financial future.

Make a List Use these sources for your retirement income list:

Social Security A U.S. government public pension plan, social security is a package of protection that provides benefits and income to retirees. The amount of money you will receive from social security is based on your earnings over the years.

Employee Pension Plans Some companies contribute to their employees’ retirement benefits. You also may contribute. These contributions and their earnings remain tax-deferred until you start to withdraw money when you retire.

Defined-Contribution Plan A type of employee pension plan, you and your employer contribute a specific amount annually. When you retire, you receive the total amount of money-including investment earnings-in your account. A 401(k) is this type of plan.

Defined-Benefit Plan This plan specifies the benefits you will receive when you retire, based on the total years on the job. The employer’s contributions are based on the money needed in the fund when participants retire.

Personal Retirement Plans These plans are especially important to self-employed people. They include individual retirement accounts (IRAs) and Keogh accounts.

Standard and Poor’s publishes the globally recognized S&P 500® financial index and provides credit ratings. It also gathers financial statistics, information, and news, and analyzes this data to help individuals, companies, and governments make financial decisions. Go to www.standardandpoors.com to learn more about this company.