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What All Women Should Know About Retirement

Women outlive men by an average of four years, and those extra years will be expensive.

It's a fear that lurks in the back of every woman's mind -- the fear of being a bag lady. It doesn't take the sight of an older woman pushing a shopping cart with all her belongings to summon up the worry about being older, alone and without enough money to stay in control of our own life.

Women worry with good reason: They outlive men. At age 60, a man has a life expectancy of 18.9 years. But a woman at age 60 now has a life expectancy of 23.1 years. Those four extra years of life will be expensive. And they'll come when you may have the least ability to make good decisions.

That's why it's important to start planning while you're in good health and when time is on your side. Here's what women must do as they approach retirement.

Take a Reality Check

Go to Answer the questions about your eating and exercising habits, as well as genetic factors such as your parents' longevity. They even ask whether you floss your teeth every day! Then, with a click of your mouse, they'll predict how long you're likely to live -- and give you some advice for living longer. That's a great place to start your reality check.

Get a Good Financial Adviser (or Two)

You need a professional adviser you can trust. Or perhaps you need a team of advisers to do checks and balances on each other. Search

here for financial planners who do not sell products to earn a commission.

You'll also need an attorney who specializes in estate planning or elder law to create a will and revocable living trust, as well as a health care power of attorney and living will. (Look

here and

here to find qualified attorneys in your state.) Also, ask your own trusted tax preparer or accountant to review these decisions.

Ask questions. And don't fear getting different answers from your experts. We never fear asking two friends about whether a dress or shoes look good on us. It's really the same process with personal finances. So start asking questions about any advice you don't understand and trust your own good judgment as well as your advisers.

Consider Insurance and Tax Issues

I'm continually astounded and impressed that seniors can understand all the rules and regulations of Social Security and Medicare. It's worth spending some time at the

Social Security and

Medicare Web sites to learn about the system.

You should automatically receive information about Medicare enrollment about 90 days before your 65th birthday.

You'll also need a Medicare supplement program to cover expenses that Medicare doesn't pay for in full. Search for those at Web sites for the

American Association of Retired Persons or Medicare. It's important to sign up for a supplement within the first six months of becoming eligible so you can't be turned down for the best and most inclusive Medigap supplement.

At the same time, sign up for Medicare Part D, the prescription drug program, which you'll need unless you're covered by a retiree prescription plan. Sign up immediately, even if you're not currently taking expensive prescriptions, by using the Web sites's "plan finder" tool. Doing so will help you avoid expensive monthly penalties later.

Just because you no longer work full time work doesn't mean you've retired from the income tax system. Check with your accountant to see whether you must file quarterly estimated tax forms and make deposits to cover taxes owed on your retirement income, and possibly on your Social Security income. And don't forget to check with retirement plan custodians for minimum withdrawal requirements which start at age 70-1/2.

Finally, consider long-term care insurance, because you don't want to be at the mercy of state Medicaid programs, which only provide services in nursing homes. LTC insurance gives you the choice of home health care or assisted living if you need it, as well as providing a care coordinator who can help you make decisions.

Planning for retirement is scary -- especially for a woman who expects to live out her final years alone. The only thing scarier than planning is the consequence of


planning while you can. And that's The Savage Truth.

Terry Savage is an expert on personal finance and also appears as a commentator on national television on issues related to investing and the financial markets. Savage's personal finance column in the Chicago Sun-Times is nationally syndicated, and she released her fourth book,

The Savage Number: How Much Money Do You Need?

in June 2005. Savage was the first woman trader on the Chicago Board Options Exchange and is a registered investment adviser for stocks and futures. A Phi Beta Kappa graduate of the University of Michigan, Savage currently serves as a director of the Chicago Mercantile Exchange Corp. She also has served on the boards of McDonald's and Pennzoil.