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Retirement
Retirement means more free time, the ability to pursue your dreams, and the end of work. Sounds great! But retirement means the end of something else, too: a regular paycheck. That can be a challenge now that people are living longer than ever before—and that your retirement might last nearly as long as your time in the workforce did. With a bit of planning and self-discipline, though, you can make sure you have enough income to support yourself throughout the retirement phase of your life.
Social Security
It’s a federal retirement program that you pay into it during working years and draw from during retirement.
It’s a mandatory program, so everyone has to contribute.
The average retired worker receives about $1,360 a month.
Retirement plans that may be offered through work
Pensions are retirement contributions that your employer makes on your behalf. Only 20 percent of Americans have pensions today, down from about 40 percent in 1980.
401(k)s are retirement plans offered by some employers. They allow you to put away money, and to choose how it’s invested. Your contributions are tax deductible, and may be matched by your employer.
403(b)s and 457s are similar to 401(k)s, but are just for teachers, municipal workers, certain government employees, and people at non-profit institutions.
Retirement plans you fund on your own
Individual Retirement Accounts (IRAs) allow you to save up to a set limit each year.
With traditional IRAs, the money you contribute is tax deductible, but your withdrawals during retirement are taxed.
With a Roth IRA, the money you contribute is not tax deductible, but you’ll pay no taxes on your withdrawals during retirement.
What happens when you change jobs?
If you leave your company, you can no longer contribute to its 401(k) program, but the money in your account still belongs to you.
When you leave your company, you take your retirement savings with you by “rolling over” your 401(k) funds into a rollover IRA. There are no fees or taxes for this process because you’re simply moving the money from one retirement account to another.
Can I make a withdrawal from my retirement account before I actually retire?
Yes, but you’ll have to pay taxes on the amount you withdraw, plus a penalty of 10 percent.
In general, avoid early withdrawals from your retirement account except for in cases of emergency.

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