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• Social Security Cards for self, spouse and dependents. Social Security numbers for child care providers and alimony recipients.
• 2001 IRS & State tax books.
• Copies of 2000 tax returns.
• For sales of stock & mutual funds: dates and dollar amounts for each transaction.
• Forms 1099 for Social Security; pension; interest; dividends; IRA distributions.
• W-2 forms. Tax-exempt interest/dividends.
• To itemize, list of taxes paid, medical, mortgage, charitable contributions, etc.
• Other documents as may be needed to complete your taxes.

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Calculating your retirement income and the size of your nest egg can be complicated. When will you retire and how long will you live? What can you expect from a pension and Social Security? How will inflation affect your income and savings both before and after retirement? What return can you reasonably expect to receive on your investments? All of these questions and others must be answered before reasonably accurate estimates can be made.

How much should you save?
The American Savings Education Council, a coalition of private and public sector institutions, has devised a relatively simple exercise to acquire a ballpark estimate of how much to save. It uses three sets of easy-to-understand calculations which assume the following: 1) You will live to age 87; 2) If you have Social Security, you will begin to take it at age 65; and, 3) Your assets will earn a constant three percent real rate of return after inflation. Follow the instructions below to estimate your retirement income shortfall, the additional assets you need and how much to save each year to reach your goal.

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Simplified worksheets with numerous financial planning assumptions can sacrifice accuracy for expediency. The final result of the computation (previous page), for example, is in today's dollars. To make this exercise more useful, an annual review and re-calculation is recommended to update your salary, savings and income expectations. The American Savings Education Council also recommends further analysis "using a more detailed worksheet, with computer software or with the assistance of a financial professional."

Unfortunately, savings and income formulas do not work equally well for everyone. The hypothetical example (previous page) is best suited to those people who do not expect to live past 87 years and who anticipate a three percent rate of return on their savings. But what if it would be more prudent for you to assume a longer life span? Women, for example, live on average longer than men, and both men and women have a fifty percent chance of outliving the years listed in life expectancy tables. (Your life expectancy is not the outer limit of how long you can live. On average half the people your age will still be alive when you have reached your stated life span.) Smart Money magazine believes that rather than life expectancy tables you should use the years listed below. Instead of a 50/50 chance of outliving your life expectancy, it may reduce the chance of depleting your nest egg to 20 percent. (Smart Money, May 2000).

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Using data from withdrawal tables like the one above has several major difficulties. No one knows for certain the rate of inflation or their actual rate of return. Sometimes people use unrealistic assumptions to daydream about the future. If you require savings for 25 years and want to withdraw seven percent annually, your rate of return must be ten percent! Be cautious. A six percent return with a five percent withdrawal rate may be more realistic.

Another difficulty of the data above is that nothing is left for your heirs. If you intend to leave an estate, this table is not suited for you.

With so many variables to consider, don't rely too heavily on only one computation to answer your retirement income questions. Instead, continuously update your estimating assumptions and try various retirement income formulas to see how closely they correlate with each other. If you keep re-evaluating your situation as the years go by, you can have some confidence in the data underlying your retirement plan.

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For some time, brokers have been advising their exchangers about section 1031. When selling investment real property the exchanger should be advised to exchange into more desirable property. The exchanger defers taxes and preserves their equity for reinvestment. The exchange creates the possibility of multiple commissions for the broker.

In September 2000, the IRS issued a Revenue Procedure describing a "safe harbor" within which exchangers can perform "Reverse" 1031 exchanges (buy first, sell second). In a "seller's market" exchangers want to first buy their replacement property and then see their relinquished property. This is now allowed under IRC section 1031.

"Reverse" 1031 exchanges now demand that the broker also advise the exchanger about section 1031 whenever an investment property is being purchased. Why? "Reverse" 1031 exchanges create a perfect opportunity for an exchanger to dispose of a property which no longer fits within their portfolio. When purchasing investment real property the exchanger should be advised to exchange out of less desirable property. Again, "Reverse" exchanges create the possibility of multiple commissions for the broker.

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If you don't pay for a long-term-care stay out of your own pocket or protect yourself with long-term-care insurance, qualifying for Medicaid is your only other viable option. (Medicaid is a jointly funded, federal/state health-insurance program for certain low-income and needy people).

Many people think that Medicare will pay for them, but in most cases it will not. Medicare provides health insurance to people age 65 and over and for those with permanent kidney failure and certain people with disabilities. When it comes to a long-term-care stay, Medicare will pay only if you first have been hospitalized for at least three consecutive days within the last 30 days prior to admittance into a certified, skilled nursing home.

If you do qualify for Medicare, it will pay only a portion of your nursing expenses for the first 100 days. Since the average length of stay in a nursing home is almost three years, Medicare may not solve the problem.

If you're clever enough to hide your money to make yourself eligible for Medicaid, you may regret it. The care that you would receive as a patient being paid for by Medicaid in many nursing homes is not the same as if you were a private-pay patient.

If you can afford the monthly premiums, long-term-care insurance is a safe way to protect yourself and your money. But if you're looking for other ways to protect your assets, consult an elder-care attorney in your state. Laws vary from state to state. Remember, Medicaid is for those who are financially impoverished, but there are many ways of getting to the financial level needed to qualify. One way people accomplish this is by gifting assets to people they trust - usually family members. You and your spouse can each gift $10,000 per year without tax consequences. You can also use part or all of your unified credit, which is $675,000 this year.

As long as you complete your gifts three years prior to applying for Medicaid (five years if you have a living trust), you may qualify for Medicaid. To qualify for Medicaid, you can't exceed the sum of state-determined money or assets.

For more information on Medicare and Medicaid, go to www.hcfa.gov.

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• Realize that just because something is on the Internet doesn't mean that it's true. Anybody - even someone with invalid information - can post information online or host a website.
• Don't believe urban legends. Those strange stories are usually scams. Don't pass them on to your friends. Oftentimes, they are devices for secretly gleaning the e-mail addresses of your friends so they can be sold to marketers lists. Don't unsubscribe to the e-mails either, just delete them.
• Keep your anti-virus program up to date. That means you want to subscribe to the option to keep your program current on a regular basis. Six to 15 new viruses are released daily, so protect your computer.
• Buy a surge protector. A cheap one won't do much good. Get a good one to protect your computer from power surges.
• Use your intuition and common-sense. The Internet is just like the outside world. It's filled with good things as well as bad things.
• Use good writing techniques when writing e-mail. Proofread everything before sending it off.
• Learn about all of the Internet's advantages. Some things you can use are instant messaging, search engines, newsgroups and photosharing.

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