Safeguarding Your Retirement Income: Follow Four Simple Rules, Advises I.I.I.

INSURANCE INFORMATION INSTITUTE
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NEW YORK, December 30, 2005-Making your New Year's resolutions? Focusing on your retirement income, and what you can do to safeguard it, should be top of your list.
There are four simple steps you can take to ensure your income is secure and sufficient when the time comes, says the Insurance Information Institute (I.I.I.). These steps apply not only to "defined benefit" plans such as those covering large private and many government employers, but also to 401(k) plans, and should be part of your annual financial review.

"The main principle to follow is to decrease your reliance, for your retirement security, on your employer's continuing financial health," says Dr. Steven Weisbart, economist at the I.I.I. "This means you have to take some initiative, but the added security will be well worth it."

Step 1: Contribute the match
If your employer offers a 401(k) plan and matches your contributions, contribute to the plan at least as much as you need to reach the maximum matching amount. If you can afford it, contribute past the matching amount up to the maximum allowable contribution.

Click here for more information on step 1.

Step 2: Trim investments in employer stock
The next step is to make sure your retirement savings don't vanish suddenly. If you are investing through a 401(k) or Individual Retirement Account (IRA) in your employer's stock, transfer some of the employer stock investment to other assets so that the value of the employer stock you own is no more than 10 percent of your investments.

Click here for more information on step 2.

Step 3: Roll over after you leave
If you stop working for your employer for any reason, and if the pension plan permits you to take money out, do so and "roll the money over" into an IRA. There are three powerful reasons to do this: employee mobility, company stability and control over your investments.

Click here for more information on step 3.

Step 4: Diversify your investments
Don't invest all of your IRA and 401(k) money in one type of investment, such as stocks. Put some in bonds. And make sure your stock and bond investments are, in turn, broadly diversified among different types of stocks and bonds. If you follow steps 1 to 3, you'll be doing a significant amount of investing on your own. As you do, you should follow the most basic of investing principles: diversification. Invest in different types of assets, so that if one type disappoints, your entire retirement income doesn't suffer to the same degree.

Click here for more information on step 4.

For more information, visit the Insurance Information Institute's Web site (www.iii.org).

The Insurance Information Institute is a nonprofit, communications organizations supported by the property/casualty insurance business.