Get free help preparing your taxes from AARP Foundation Tax-Aide. Find a location



Celebrate Black Life, History, and Culture!
Rewards for Good Sweepstakes
Happy African American couple
Life at 50+ - Register for the Digital Experience
AARP Auto Buying Program

Jobs You Might Like



6 Ways Women Can Prepare for Retirement

Start putting yourself first and set goals for your savings

3. Calculate how much monthly income your personal retirement savings will generate for you. There are basically two ways you can create income out of the lump sum sitting in your 401(k) or similar account. First, you can try to live off the interest and preserve the principal so that it continues to earn interest for the rest of your life.

As a rule of thumb, financial planners suggest withdrawing no more than 4 percent of your savings each year. But really, you shouldn't withdraw any more than the interest actually earned. Or, you can use part of the lump sum to build your own "pension" of sorts by buying an income annuity through an insurance company. The annuity will provide you a guaranteed monthly check for life. There are a lot of complicated annuity products out there, but what I'm suggesting is a simple annuity that you pay for in one lump sum and that immediately starts paying you a fixed amount for the rest of your life, no matter how long you live.

4. Set your budgets. You need a current budget — to help you cut costs and pay off debt before you retire — and you need a retirement budget to make sure your monthly expenses don't exceed your monthly retirement income.

5. Fill the gap. For many of us, there will still be a gap between the money we will need in retirement and the income we will have in retirement. We may need to downsize, work longer or part time or convert our hobbies into money-making enterprises.

6. Consider change. Life Reimagined is an AARP project that aims to help you reflect on your gifts, explore new possibilities and connect you with a community of like-minded people to support you on your journey. You'll find all kinds of stories of life change, from an exhausted former Broadway performer who became an acupuncturist to a former office worker who started her own pet-sitting business so she could also take care of her aging mother. Another related AARP initiative is Work Reimagined, which connects older workers with job openings at companies that value mature workers and their experience. There are also plenty of resources for people looking to reenter the workforce. Check out the AARP website for upcoming and archived webinars about Work Reimagined and general workplace issues.

Jean C. Setzfand is vice president of the Financial Security Team in the Education and Outreach group at AARP. She leads AARP's educational and outreach efforts aimed at helping Americans have financial peace of mind in retirement. She can be reached at or on Twitter at @JS

You May Also Like

Go to the AARP home page every day for something new

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts


Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

Jobs You Might Like

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

UPS Store membership discount aarp benefits

Members save 15% on eligible products/services, 5% on UPS shipping at The UPS Store®.

membership adt

Small business owners save 20% on new installation of any new ADT security system.

membership consumer cellular

Members save on monthly service & usage fees and get free activation with Consumer Cellular.

Member Benefits

Renew today! Members receive exclusive member benefits & affect social change.

Rewards for Good

Your Points Balance:

Learn More

Earn points for completing free online activities designed to enrich your life.

Find more ways to earn points

Redeem your points to save on merchandise, travel, and more.

Find more ways to redeem points

Advance your skills. Transform your career.

Explore your learning possibilities.