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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

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