Published: October 26, 2009 08:00 pm         

Social Security: Flesh out your financial skeleton

As Halloween hovers on the horizon, the most frightening prospect for some adults has nothing to do with ghosts or goblins. Rather, it’s their scary lack of preparation when it comes to retirement planning.

We suggest a new activity: fleshing out your financial skeleton. Here are the rules.

Know what lurks behind the closet door. Or in your file cabinet, as the case may be. Take a look at your Social Security statement, which comes in the mail every year about two to three months before your birthday, if you are at least 25 years old and not yet receiving benefits or Medicare. The statement provides an estimate of your retirement benefit based on the yearly earnings reported to Social Security. You also can get an immediate and personalized benefit estimate online by using the Retirement Estimator: www.socialsecurity.gov/estimator.

Add ingredients to your cauldron. Social Security was never intended to be your only source of income when you retire. You also will need other savings, investments, pensions or retirement accounts to make sure you have enough money to live comfortably. According to financial experts, you will need at least 70 percent of your annual working income when you retire to enjoy a comfortable lifestyle. For the average worker, Social Security provides about 40 percent of it. You have a 30 percent gap to fill, so start throwing spare change in the retirement cauldron now.

Keep an eye out. In addition to checking Your Social Security Statement each year, watch your 401k and IRA account balances grow through compound interest. Try to continue contributing to your accounts every month.

Follow these rules and watch your financial skeleton pack on the pounds. When retirement rolls around, your fleshed-out retirement plan can keep the financial hobgoblins away and set you up for a comfortable retirement. And when you’re ready to retire, it’s so easy to do it online at www.socialsecurity.gov.

Start now and there’ll be no reason to fear retirement.