Retirement Planning for Women:  Overcoming the Obstacles

 

Women generally are at a disadvantage when it comes to saving for retirement.  Let’s take a look at some of the key obstacles.

 

Þ     Statistically, women in the US live to age 80 while men live just 74 years.  Obstacle - a longer retirement to provide for.

Þ     On average, women earn three-fourths as much as men while they are working.  Obstacle -less income to save from.

Þ     The typical woman will take time out from her work career to raise children or care for elderly parents.  Obstacle - a shorter career to save from.

Þ     The average age of widowhood, according to the Social Security Agency, is 56 years.  90% of women will be solely responsible for their finances at some point in their lives.  Obstacle - self sufficiency is a must.

 

With longer to live, lower wages, shorter working career, and often widowhood as obstacles to providing for retirement, women should give emphasis to planning ahead for a secure retirement.

 

Here are some tips to providing for that secure retirement.

 

ü      Start savings as early as you can.  The sooner you start the longer the benefits of time work for you.  Try to save at least 10% of every paycheck.  “Pay yourself first!” as the old adage goes.

ü      Be in charge of your planning.  Even if you are married, have your own plan while working together toward a common goal.  Review your plan at regular intervals.

ü      Seek out professional advice.  Work with a qualified advisor.  Find an advisor that shares your goals and outlook.  Have them present and explain different options.

ü      Consider saving for retirement as a top priority not a luxury.  Cut back on other unnecessary expenses if necessary.

ü      Let your employer help.  Many companies match a portion of your retirement contributions.  You should at least participate in the company plan to the extent of the match.

ü      Put Social Security in perspective.  It is more likely than not that future benefits will be less, not more, than current levels.  Current rules say that if you are married for 10 years more, you are entitled to all of your benefits, or half of your husband’s, whichever is greater.  If he dies, you may collect all of his.

ü      Watch for bumps in the road.  Often paying for college and weddings for children become a priority or even consume retirement assets.  To prevent those events from disrupting your retirement planning progress, you should simultaneously plan for them.  Ditto for life’s unexpected emergencies, save and maintain an emergency fund so that you don’t have to rob that retirement fund.

 

Despite the obstacles, with a plan and priority your retirement accumulation opportunities can be optimized.

 

_______________________

 

Jim W. Norman, CPA, PFS is a principal with Norman, Johnson & Co., PA, a Spartanburg Certified Public Accounting firm.  This column is intended to provide you with an informative summary of the subject matter covered.  You should consult with your tax and legal advisors for details and assistance in applying this general information to your specific situation.  (jim@njcocpa.com)

 

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