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Jean Chatzky’s top 10 retirement tips

IRA rollovers? The right amount to save? Our financial editor has advice to help make the best decisions about retirement savings.

Sounds a little selfish, I know. But when it comes down to it, saving for retirement is a more important goal than saving for your kid's college education.

College tuition comes with a safety net to fall back on (financial aid), but your golden years do not. Stick to your retirement savings plan, and save for college tuition as if it were a down payment for a house.

Aim for at least a third more than the amount you think you’ll need. The more you can sock away ahead of time, the less you and your children will have to borrow later.

How to make your savings lastWe have long known that there are two keys to making retirement assets last: asset allocation and managing your stream of withdrawals. But the choices are many and varied. How can you increase your own chances of retirement success?

  • Keep a lid on withdrawals. Research shows the magic number is 4 percent. If you keep your annual withdrawals below that, your money has a good chance of outlasting you. Remember, though, that the balance is a moving target — 4 percent of a $500,000 balance is $10,000 less than 4 percent of a $750,000 one.
  • Work longer. If 4 percent isn't enough to live on comfortably, think about working — not forever, but for a few years. A few extra years in the workforce gives your portfolio added time to grow and reduces the number of years you will need to draw on that money.
  • Have a cushion. Two to three years' worth of living expenses in a money-market fund or short-term bond fund means you won't have to sell investments when they're down.
  • Allocate wisely. The solution isn't ever to have 100 percent of your assets in equities, nor is it to have 100 percent in treasuries and cash. The solution, of course, lies somewhere in between.

How to ace your IRA rolloverNo matter how old you are, you have an IRA rollover in your future. If you're an older baby boomer, and you've been saving smartly in a company plan for a decade or more, you'll be rolling over what could be a six- or seven-figure sum from your 401(k). For younger folks, you have a rollover decision to make every time you change jobs. What do you do?

  • Don't spend it. It may sound obvious to say don't cash a lump sum out of your current plan and spend it — yet that's exactly what many people do. Big mistake. You'll owe income taxes plus a 10 percent penalty if you're under age 59 1/2, and you'll lose the chance for future tax-deferred growth.
  • Leave it where it is. If you have more than $5,000 in your account, you can keep your money in your current plan. If you're pleased with the investments or don't want to go through the trouble of choosing new ones, there's little downside to staying put.
  • Move it to your new plan. This makes sense if your new plan has more or better options or lower fees than your previous ones. Remember, a 401(k) has a big advantage over an IRA: It can be helpful if you ever need to borrow in an emergency. You can't do that with an IRA.
  • Don't let a work break mean a savings break. Even if you leave your job and your spouse is maxing out his or her 401(k), you can continue to save for retirement and college by stashing up to $3,000 a year in a spousal IRA. It may be tax deductible and could prove invaluable if you become widowed or divorced. Time is on your side here. If you start setting aside $1,000 at 25, keep it up until age 35, and never add another penny, you'll have $278,000 at retirement, assuming it grows at 10 percent.

Jean Chatzky is the financial editor for “Today,” editor-at-large at Money magazine and the author of “Talking Money: Everything You Need to Know About Your Finances and Your Future.” Her latest book, "Pay It Down: From Debt to Wealth on $10 a Day," is now in bookstores. Copyright ©2005. For more information, go to her Web site, .