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7 steps to take at age 59½

If you're one of the millions of baby boomers turning 59½ this year, 2007 will be a financial milestone of sorts. This is the year you'll be old enough to start spending, without penalty, the money you've faithfully stashed away in your IRAs and other retirement-savings accounts through the years.

It may not feel like cause for a huge celebration, but it is a good time to take stock of savings, pensions, Social Security and all the other financial issues that seemed totally meaningless just a few years ago when retirement was an eon away. Now you are only a handful of years from 65, and those years will go by faster than you think.

1. The gold watch and other benefits. Ask the human resource department or the accounting department to figure out what, if any, money or insurance you'll be entitled to when you retire. If part of it is in the form of company stock or options, ask what can be done to ensure that you'll be eligible to sell the stock and pay taxes at the 15 percent capital gains rate instead of regular income-tax rates.

Financial issues
Take this opportunity to examine these seven financial issues while you're still in a good position to do something about them.
Moves to make
1. The gold watch and other benefits.
2. Hunt for missing money.
3. Maximize Social Security.
4. Maximize your savings.
5. Roth or regular?
6. How much will it take?
7. Take complete inventory.

2. Hunt for missing money. Make a list of all the past employers for which you worked for more than a year. Call the human resource departments and ask if you are entitled to any retirement benefits. If you are, make sure that the employer has your current address and marital status -- unless you really want your ex-spouse to have a claim. If the plan calls for naming a beneficiary, update that information.

If your former employer has gone out of business or for some other reason has ended its defined-benefit plan, you still may be entitled to money. The Pension Benefit Guarantee Corp., a federal corporation created by the Employee Retirement Income Security Act of 1974, or ERISA, will help you find it. You can search for missing pensions at Pension Benefit Guaranty Corporation's Web site.

Likewise, if you left your 401(k) plan with a former employer and lost track of its whereabouts, try looking for it at the new National Registry of Unclaimed Retirement Benefits search site.

3. Maximize Social Security. Social Security is under the microscope, and there could be changes. But no matter what happens, it's probably safe to say that the longer you work and the more you earn, the more you will get. Right now, Social Security calculates the amount you'll receive based on earnings over the 35 years in which you earned the most. If you have worked fewer than 35 years, then it will factor in zeros for those years. Working more to wipe out the years in which you made little or nothing can raise your payment significantly.

Next: Start by dividing your savings into three pots ...
Page | 1 | 2 |
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