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The single retiree

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If you're not sure how much you should be saving, Pagliarini has devised a simple formula: whatever percentage represents half of your current age. "If you are 50, you should be saving 25 percent of your income," he says. "A lower percentage -- like 10 percent -- isn't enough. And with this formula, the percentage increases as you get older, so you'll be saving more."

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Savings vehicles
The obvious first destination for your retirement savings dollars is an employer-sponsored retirement plan -- a 401(k) , 403(b) or 457 plan. If your employer matches any portion of your savings, those funds are equivalent to free money. So if you can't contribute the maximum that the law allows -- $15,500 in 2007 for those under age 50 -- contribute at least enough to get that employer match. (If you're over 50, IRS rules permit you to sock away $5,000 extra a year in catch-up contributions.)

Then figure out how you can bump that percentage up quickly, perhaps by immediately directing any cost-of-living increases or bonuses into your retirement plan so you don't even see them in your paycheck.

If you max out your 401(k) or don't have one, consider either a traditional or Roth IRA. If you are under certain income limits, you can make a before-tax contribution to an IRA of $4,000 in 2007, along with a $1,000 catch-up contribution if you are 50 or older. With a Roth IRA, contributions are made on an after-tax basis and you pay no tax when you remove the money in retirement.

Experts are divided on the advisability of setting up a Roth if you're single. "The biggest benefit of a Roth -- the ability to pass on money to your heirs -- isn't as big of a deal for someone who is single and has no kids," Enright says. Pagliarini disagrees, saying, "I like Roths because you pay the tax now, when tax rates are low and you don't have to take the minimum required distributions that you have to take with a deductible IRA."

Financial safeguards
Because single people don't have the safety net that those in couples have -- a second income -- they should create that safety net themselves in the form of additional savings and insurance. You should have at least three months of expenses in an easy-to-access emergency fund or at the very least in an accessible home equity loan or home equity line of credit that you currently have open. (Compare rates at Bankrate's home equity channel page.)

 
 
Next: Singles should consider buying a long-term disability policy.
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 RESOURCES
Serial retirees
5 ways to make savings last
Renting in retirement
 TOP RETIREMENT STORIES
IRA penalty has multiple exceptions
Best times to shop for bargains
Remarriage saps Social Security benefit
 

Compare Rates
NATIONAL OVERNIGHT AVERAGES
IRA MMA 0.63%
1 yr IRA CD 0.72%
5 yr IRA CD 1.76%
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