Do you know how you will pay for your living expenses when you retire? If you don’t have enough retirement savings, you may have to continue working longer than you would like, or if you are unable to work, you may have to sell assets to pay bills. If you don’t currently have a plan in place, or if you haven’t given much thought to your plan, you should consider your retirement savings options.

Work Retirement Account

The first place to start any retirement savings plan is at work. Many employers offer a 401K or pension plan. If your employer offers a pension plan, you will receive a certain amount each year after you have retired. With a 401K plan you can allot part of each paycheck, before taxes, to go into your account.

If your employer offers a 401K match program, this means they will contribute a percentage of what you put into your account. This employer contribution is free money, so take advantage of it by contributing as much as you can up to the yearly limit. The limit for 2010 is 16,500. If you are over 55, you can contribute an extra 5,500.

Personal Retirement Account

Beyond a work retirement account, you should also consider a personal retirement account. Two common types are Roth and Traditional IRAs. With a Roth, the money you put in is taxed and your later withdrawals are tax free (and if you don’t need funds in a particular year, you are not required to take out any part of the Roth IRA). A traditional IRA, is tax-free contributions like your 401K.

You will also have a yearly contribution limit for your IRAs. The 2010 limit is 5,000 with a 1,000 catch-up provision for those over fifty. If you are over fifty make sure to take advantage of any catch-up retirement programs.

Social Security

Social Security retirement benefits are available to any American who works for at least ten full years. Once you reach 62, you can apply for benefits. If, however, you wait until your full retirement age which is currently 65 to 67 depending upon birth year, your payment will be much larger. At full retirement age, you will receive about forty percent of your pre-retirement income.

Investment

Besides saving money, you must also focus on investing. To find good investments you can either research your options or speak with a financial advisor. Investing your savings allows your money to work harder so you don’t have to. But be careful, there is always a risk.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

Retirement planning is something that a lot of people today put off until the last possible moment, but the sooner you begin planning your retirement the better. For many people, Social Security is a major source of income after retirement, but the Social Security system isn’t something that everyone understands. This quick guide will give you the basics of how Social Security works, and how you earn the right to collect Social Security Benefits.

About Social Security

In 1935 the Social Security Act was established, providing that Americans would have some form of financial support in their later years when they were no longer working. Before there was Social Security, support of the elderly often fell to families, local communities and governments. The Federal Government funds Social Security and Medicaid by withholding money from your pay while you are still working. Later when you retire, you have a right to access payments through Social Security, as well as medical coverage through Medicaid.

How you earn Social Security benefits by working.

As someone works, throughout their life they are also earning Social Security benefits in the form of credits. To collect Social Security you will need 40 credits if you were born after 1929. The more money you make the faster you will earn your credits for retirement.

How to keep track of your Social Security credits.

Keeping track of your Social Security credits isn’t difficult. The Social Security Administration helps you to do this. You will find out how many credits you have when the Social Security Administration mails you an annual summary that lists the credits you have earned. You can expect this statement in the mail approximately three months before your birthday each year.

Along with the credits you’ve earned, the statement will contain your earning history, as well as the amount of benefits that you can expect to collect after retirement. Your benefits are determined by how much money you earn throughout your life, so it is important that your earnings be accurate on the statement. If for some reason there is a discrepancy, contact the Social Security Administration as soon as possible to find out what you can do to correct the problem.

Knowing how the Social Security system works can help you now, and will be especially helpful after you retire and begin collecting your benefits.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.