HOW MANY YEARS OF RETIREMENT CAN YOU AFFORD? (FINANCIAL FOCUS)

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

When do you plan on retiring? You might have said "65" -- if the question had been asked a generation ago. At that time, most Americans did work until 65 -- or beyond, but now, just one in six of us will work until 65, according to the 1995 Advisory Council on Social Security. We're also living longer than ever. Taken together, these two factors mean that many of us will spend one-third of our lives in retirement.

That's a long time -- and it's a lot of years to pay for. To achieve a financially secure retirement, you will need to plan ahead and take appropriate action. You can start by looking at all your sources of retirement income -- Social Security, retirement plans, personal savings and investments -- and projecting how much each will provide you with during retirement.

* Social Security -- Thanks to a recent change in Social Security Administration policy, you can expect to receive annual statements of earnings and projected benefits. You also can call your local Social Security office to request this information. Keep in mind that the earlier you start receiving benefits, the lower your monthly payments will be.

* Retirement plans -- Over the past decade or so, we've seen a steady movement away from "defined benefit" retirement plans, including the traditional pension plan, in which retired employees could expect to receive a specified amount, based on salary history and years of service. Companies are now more likely to offer "defined contribution plans," such as 401(k). Because these types of plans contain variable investments, such as stocks, it is impossible to predict exactly how much you can count on during retirement. However, you can make some reasonable estimates based on projected rates of return. A financial professional may be able to provide valuable assistance in this area.

* Personal savings and investments -- Assuming you have some variable investments, you can't predict exactly how much you'll accumulate for retirement. However, as was the case with your 401(k), you can make some solid projections. Again, a financial professional can help.

Once you have an idea of how much money you're likely to have during retirement, you need to determine how long that retirement will be, and that depends, of course, on how long you're going to live. That's not something you can predict, but you can make a guess, based on your family's health history and your health. It's a good idea to add on five or 10 years to your projection; this will help you plan on the "safe side."

Finally, you need to match your retirement income with your vision for retirement. How do you plan on spending your retirement years? Many people want to consult or open a small business. Others plan on going back to school, and still others want to travel, golf or pursue hobbies.

The choice is yours, but whatever lifestyle you select, you can benefit from saving early, saving often -- and planning ahead.

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.