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	Step 5: Project if You're Saving Enough for a Comfortable Retirement
Your Initial Financial Plan: Print Out The Eight Step Checklist to Keep Track of Your Progress Step 1: Calculate Your Financial APGAR Score Step 2: Put Together Your "Ow-Ow" (Net Worth) Statement Step 3: Prepare Your Monthly Cash Flow Budget Step 4: Set Your Savings and Debt Reduction Goals Step 5:  Project If You're Saving Enough for Retirement Step 6: Work Through a Tax Projection (to Avoid Any Surprises Next April 15th) Step 7:  Review Your Life and Disability Insurance Needs Step 8:  Have an Attorney Draft Certain Essential Documents Have You Read... Feathering Your Nest: The Retirement Planner The complete retirement/investment planner. Built around the one truism of retirement planning--the sooner the better--this comprehensive book provides accessible, realistic, and reassuring guidance for creating a nest egg. Simple exercises map out a plan and set a dollar figure of what's needed.     To order this book from Barnes&Noble.com, click on Feathering Your Nest: The Retirement Planner Q: What do you call a 70 year old physician who never bothered to save any money over the years? A:  DR. Doesn't  Retire Spending more than you earn each year is very easy to do. Exotic vacations, fancy clothes, huge homes, country clubs, yachts and sailboats.... the list of things to spend your money on is endless. But remember, Hedonism is a resort in Jamaica, not a prudent lifestyle. Looking For a CPA, Lawyer or Financial Advisor who has worked with lots of other newlyweds and is familiar with the issues that affect you?	Wondering What Your Retirement Savings Will REALLY Be Worth When You Retire? These days, it seems that most workers try to contribute at least something to their retirement accounts each year.  But few have any idea (1) what their retirement accounts might actually be worth when they retire or (2) how much annual income their retirement accounts might provide to them once they stop working?   By filling in just 8 numbers on our On-line Retirement Calculator, you'll find out the answers to both of these essential questions. Saving for Retirement is as Easy as 1....2....3....4.... Take care of NUMBER 1: All retirement accounts are owned individually, by only one person. They can never be held jointly, even if you're married. People who work should take advantage of the different options offered to them at work. People who are not currently working, but are married to someone who works, are generally allowed to contribute to their own IRA each year. TOO many reasons not to contribute to your retirement plans.: Every year, there will be thousands of reasons why no contributions can be made to your retirement account. Whether the excuse is taking a vacation, saving for a house, setting aside college money.... The list goes on and on. Saving for retirement needs to be a priority. Even if you can't put away the maximum each year, put away something. Keep in mind, the earlier you start, the better!! THREE letters to help you save: I.R.A.: IRAs are a super way of saving for retirement. Whether you choose a traditional IRA or a Roth IRA, the maximum total contribution per couple is $8,000 per year in 2006 (increasing to $10,000 per couple in 2008); provided that one of the spouses has earned income in excess of the amount contributed to the IRA. Even if you or your spouse are covered under a retirement plan at work, you can still each contribute to your IRA each year.  And remember to add $1000 for each spouse that will be age 50 or older by December 31, 2006. Most employers offer either a 401(k) plan or a 403(b) plan as part of their benefits package.: People who work for employers who offer either of these plans should try to contribute to them on a regular basis. Money contributed reduces your federal taxable wages and grows tax deferred. The maximum allowable contribution is currently $15,000 per person ($20,000 if you'll be age 50 or older by December 31, 2006). If you're not currently contributing to your employer sponsored 401(k) plan or 403(b) plan, our advice to you is simple. Start Now!! The easiest way to find out what your retirement savings will REALLY be worth when you retire is to go to our ON-LINE RETIREMENT SAVINGS CALCULATOR.  All you will need to do is enter 8 numbers, and the projected value of your retirement savings will automatically be calculated. Individual Retirement Accounts (IRAs) IRAs are the most basic of all available retirement savings options.  If you're single and you earn at least $4,000, you're allowed to contribute $4,000 to an IRA.  If you're married, and one spouse earns at least $8,000, then each spouse can contribute up to $8,000 into an IRA.  And if you'll be at least 50 by the end of the year, you can contribute an extra $1,000 to your IRA in 2006. Effective 2002, the annual maximum contribution to an IRA has increased.  Thanks toThe Economic Growth and Tax Relief Reconciliation Act of 2001, you and your spouse can each contribute contribute $3,000 to your IRAs for 2002 - 2004, $4,000 for 2005 - 2007, and $5,000 thereafter. There Are Currently Two Types of IRAs: TRADITIONAL IRAs:  Amounts contributed to a traditional IRA may or may not be tax deductible, depending on whether you or your spouse are covered under a retirement plan at work, but always grow TAX DEFERRED. ROTH IRAs:  Amounts contributed to a Roth IRA are never tax deductible, but grow TAX-FREE.  Married couples whose adjusted gross income exceeds $160,000 are not eligible to contribute to a Roth IRA. Special IRA Rules for Married Couples If either you or your spouse is covered under a retirement plan at work during the year (but not both of you), and your combined income is less than $160,000, the spouse not covered by a retirement plan will have the option of making a deductible contribution to a traditional IRA, whether or not that spouse has any earned income. If your combined income is greater than $160,000, neither spouse will be able to contribute to a Roth IRA for that year. For 2006, each spouse can contribute the maximum of $15,000 to a 401(k) or a 403(b) plan sponsored by their respective employers; subject to certain limitations.  Don't overlook these plans as a great way to save for retirement. Plus, there are "catch-up" contributions of $5,000 (in 2006) allowed for people over the age of 50.  401(k) Basics: If you were to invest $1,000 when you were 25 years old, your investment would grow to be worth $30,912 when you turn 60, assuming a 10% rate of return.  If you waited until you were 50 to make a similar investment, it would only grow to $2,853 by your 60th birthday.  The moral to this example is simple. Start saving for your retirement as early as possible. It's Up to You How people save for retirement has changed dramatically over the years.  In years past, many workers counted on their employers to contribute to a pension plan on their behalf.  For many retirees, the combination of a decent pension benefit and a monthly social security check has made for a comfortable retirement. Those days, unfortunately, are over.  With employees changing jobs more than ever, companies looking to cut costs wherever they can, and social security a big question mark for young professionals, the burden for saving for your retirement now falls squarely on your shoulders. The 401(k) Plan While some companies still offer traditional pension plans, the retirement savings plan offered by your employer is most likely a 401(k) plan.  Named after its corresponding section in the IRS tax code, 401(k) plans provide you with a systematic and tax advantaged way to save for your retirement. Here's how 401(k) plans work.  As an employee, you're allowed to elect to have a portion of your salary withheld each pay period.  For 2006, the maximum 401(k) salary deferral is $15,000, subject to certain other limitations.  You then direct how your salary deferrals will be invested within your own 401(k) account.  Most 401(k) plans offer a wide variety of quality mutual funds to choose from.  Two Great Tax Breaks Participating in your employer's 401(k) plan provides you with two substantial tax breaks.  First, amounts withheld from your salary for the 401(k) plan reduce your taxable earnings. If you are in the 30% tax bracket, and contribute $10,000 to the 401(k) plan during the year, you'll save $3,000 in federal income taxes that year.  It would only cost you $7,000 in after-tax dollars to have $10,000 invested in mutual funds within your 401(k) account.  The second tax benefit is that money invested within your 401(k) account grows tax deferred.  While each year you pay taxes on the investment earnings of your non-retirement accounts, no taxes are paid on the earnings of the investments within your 401(k) account until such time that you withdraw money from the plan.  To illustrate the power of tax-deferred investing over your working years, let's assume that you have the choice of contributing $10,000 to a 401(k) plan each year for 25 years, or you can take the $10,000 as a bonus, pay the applicable taxes, and then invest whatever's left.  If you choose the 401(k) plan route, your account will grow to be worth more than $1,000,000 after 25 years, assuming a 10% rate of return.  If you choose to pay taxes along the way, your investment portfolio won't even grow to $500,000 over the same period of time. Matching Contributions Even though employees now shoulder much of the burden of saving for their own retirement, many employers do help their employees save for retirement through "matching contributions".  For example, if your employer matches 50% on the first 6% you contribute, they will add 3% of your salary into your 401(k) account each year, provided you contribute at least 6% of your salary to the plan.  Find out whether your employer offers a 401(k) matching contribution, and if they do, make sure you're contributing enough into the plan to take full advantage of your employer's match.  Don't Wait Remember, every week that goes by that you haven't contributed as much as possible to your 401(k) plan at work is a missed opportunity for saving for your retirement.  Newlywed Alert Now that you're married, don't forget to review who is the named beneficiary on all of your retirement accounts.

Here's some additional articles about saving for retirement that you might find interesting:

• No Match Doesn't Mean No Good

• How Does Social Security Work?

• Take Our Roth IRA Conversion Quiz to Help Decide Whether to Convert Your IRAs to a Roth IRA.

• The New Roth 401k

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