Why retirement planning is even more important for women
Women today are living longer than men and spending significantly more years in retirement according to the National Center for Health Statistics. Interestingly, a study by the Older Women's League found that although women depend on retirement income to last longer, women’s pension plans don’t measure up to men’s. Women only receive 54 percent as much private pension income as do men, and they are falling further and further behind. Not only are women living longer, they typically earn less and don’t spend as much time in the work force.
The traditional three-legged stool model for retirement – Social Security, pensions and savings – does not work for most women. More than half of older women would fall into poverty without Social Security benefits according to U. S. Census Bureau. While this is a difficult issue for women, there are strategies that can help build a stronger and more secure retirement, without relying on lavish gifts and inheritances.
Prepare for longer retirements. A female retiring at age 55 can expect to live another 27 years, four years longer than a male retiring at the same age according to U.S. Department of Labor. Nearly one-third of women who are 65 years old are expected to live into their 90s. In fact, the U.S. Administration on Aging predicts that the number of women over age 85 is expected to double or even triple in the next 40 years in the United States. Consequently, women may need to sacrifice some current salary in return for a good retirement plan and seek out employers who will match part or all of their savings in a contributory plan.
Put money away for retirement regularly. Just $10 to $20 a week can add up, especially if you start early. Be sure to take advantage of retirement benefits available at your workplace, including any employer matches.
Don’t stop investing because you’re not working. If you do leave the work force to raise children or care for aging parents, continue to save for retirement. If you meet income requirements for a spousal IRA, you can contribute up to $6,000 in 2019, which may be tax deductible.
Stick with the program. Don’t raid your retirement fund for non-retirement expenses. When you change jobs and have savings in your company retirement account, carefully consider your options. Cashing out and spending a lump-sum payout will hurt your long-term savings goals.
If you are at mid-life and have not yet started saving for retirement, don’t despair but don’t put it off either. There’s still time to build your retirement savings. A financial advisor can help you create a plan and stick to it. If you are age 50 or older, you may qualify to make a catch-up contribution to your retirement account in addition to your annual savings amount.
Plan in advance for health coverage and long-term-care expenses. Most retirees who are successfully managing health care expenditures have additional coverage beyond Medicare. If you do not expect to have adequate coverage, plan to purchase additional insurance. Since Medicare does not cover nursing home expenses, consider buying long-term-care insurance after age 50.
Look for good advice. Multiple research studies have shown that people who work with a financial advisor are more than twice as likely to feel “very prepared” financially for retirement, one and a half times more likely to feel “on track in preparing for retirement,” and nearly one and a half times more likely to feel retirement had worked out as planned. Consider consulting a qualified financial planner to help you develop a retirement savings plan, address the unique financial challenges you face as a woman and plan for adequate income in retirement.
The views expressed represent the opinions of Benedetti, Gucer & Associates and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person.
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