Make Your Retirement Dreams Come True

Physician's Money Digest, September15 2004, Volume 11, Issue 17

When you think about retirement,do you see yourself on aporch swing watching theworld go by? Maybe you picture yourselfout on the golf course perfecting yourswing. Perhaps you'd like to continueworking part-time or spend your time volunteering.Retirement today does notmean what it has traditionally meant, anda little planning can make a big differencein your financial picture when you retire.

Wall Street

Journal

To achieve your retirement dreams, youmust be prepared financially for retirement.According to the , the median value of the retirementsavings in a US household is $40,000,and many Americans are not confidentthat they have saved enough to live thelifestyle they would like to live in theirgolden years of retirement.

Suspect Social Security

When planning for retirement youshouldn't depend solely on SocialSecurity. The program's future continuesto be in question, and it was neverdesigned to provide all the income youneed to live comfortably in retirement.At best, the income you receive fromSocial Security benefits will supplementyour retirement savings.

Take advantage of all the availabletax-advantaged vehicles to save for retirement.An employer-sponsored plan, suchas a 401(k), is an excellent way to save,especially if the company matches yourcontribution with one of its own. Whilethe plans differ in their details, each letsyou defer a portion of your salary into anaccount. This money is deducted fromyour taxable income, and once it's in theaccount, it has the potential to grow tax-deferreduntil withdrawn. However, taxesare due upon withdrawal, and withdrawalsprior to age 591/2 are usually subjectto a 10% IRS penalty.

In addition, with many of these plansthe investments you can choose from arelimited. Many companies also allowemployees to invest in company stock intheir retirement plans. While there isnothing inherently wrong with havingsome of your company's stock in youraccount, it's important to regularly reviewthe amount of any stock you own andmake sure you are properly diversified.

Remember Your IRA

Note:

Like an employer-sponsored plan,money deposited into a traditional IRAhas the potential to grow tax-deferreduntil it's withdrawn. Although anyoneyounger than age 701/2 who has earnedincome can contribute to a traditionalIRA, the amount of your contributionthat is tax-deductible depends on manythings, including whether or not you arecovered under an employer-sponsoredplan, your tax filing status, and yourincome. In addition, if you are eligible,you may want to consider a Roth IRA.These types of plans offer you the opportunityto grow your money tax-free, aswell as pass your assets income tax-freeto your heirs. If you are age 50 orolder, you can take advantage of catchupcontributions with both traditionaland Roth IRAs.

The dilemma most people face is thatthey want to enjoy some sort of retirementbut aren't making financial preparationsto do so. Don't let this happen toyou—retirement is too important to beput off by financial situations. Start savingtoday for tomorrow's retirement.

Joseph F. Lagowski is vice president,

investments, and a financial

consultant with AG Edwards in

Hillsborough, NJ. He welcomes

questions or comments at 800-288-0901 or www.agedwards.com/fc/joseph.lagowski. This article was provided

by AG Edwards & Sons, Inc, member SIPC.