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Here's a scary stat: 2.5 million women age 65 and over live in poverty — more than twice the number of men living in poverty at that same age.
What's going on?
- Many women STILL rely on the men in their lives to handle financial planning. When men leave (divorce, death), they feel lost and take too much time figuring things out.
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On average, women earn less over a lifetime because they take breaks for child rearing and may be paid less in certain professions.
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Women are more likely to work in part-time jobs that don't qualify for a retirement plan.
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Of the 62 million wage and salaried women (age 21 to 64) working in the United States, just 45% participated in a retirement plan. Remember, even small amounts can get big returns if invested carefully.
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On average, a female retiring at age 65 can expect to live another 19 years, 3 years longer than a man retiring at the same age. Savings and investments can increase a woman's chances of having plenty of money in her retirement.
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On average, a female retiring at age 65 can expect to live another 19 years, 3 years longer than a man retiring at the same age. Savings and investments can increase a woman's chances of having plenty of money in her retirement.
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By and large, women invest more conservatively than men. Choose carefully where you put your money but learn how to improve your investment returns.
Source: United States Department of Labor
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How can you make certain you’re ready for retirement? “That’s exactly the right kind of question we love to answer,” said Louise Googins who’s been in the financial planning industry for decades.
She and her business partner, Tracey Anton, specialize in preparing men and women for retirement. There are key factors that help women and men retire comfortably, and if you’re especially motivated and organized, you can even retire rich.
1. Start saving money TODAY. Women who retire well save and invest up to 30% of their income. Louise and Tracey can help you determine how much money you’ll need to retire.
2. Make a plan. Once you start saving, draft a plan. List what you want out of retirement. Write down your dreams and ideas. |
3. Open an IRA – Individual Retirement Account. Your financial consultant will guide you on whether a Traditional or Roth IRA is better for you given your circumstances. Both options offer important tax advantages that can add up to significant amounts of money by retirement. The bottom-line is that an IRA allows your money to grow tax-deferred. Depending on your income, tax filing status, and ability for you (and/or your spouse) to contribute to a workplace retirement account, your IRA contribution may even be tax deductible – which means GREATER savings for you.
4. Now that you have an IRA, Max out the annual contribution EVERY year. When it comes to IRA contribution limits, Uncle Sam’s motto seems to be “use it or lose it”. Workers who haven’t made the maximum permissible contribution to their Traditional or Roth IRA by the cut-off date are flat out of luck unless they are in their mid-fifties and qualify for catch-up contributions.
5. Find out if your employment offers matching funds as part of your 401(k). If so, this is FREE money for you. Many companies match up to 50% of the contributions employees make to their 401k and other retirement accounts. |
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6. Get the facts about your Social Security Benefits. Social Security pays benefits that are on average equal to about 40% of what you earned before retirement. Social Security has stopped sending statements but Tracey and Louise can make reasonable estimates for you.
7. Getting Divorced? We’ll help you decide a reasonable settlement. You may be able to obtain rights to a portion of your spouse’s retirement benefit (or he may be able to obtain a portion of yours). In most private-sector plans, this is done using a qualified domestic relations order (QDRO) issued by the court. You or your attorney should consult your spouse’s plan administrator to determine what requirements the QDRO must meet.
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8. Be careful when you quit or change jobs. Before you quit your job, we’ll help walk you through your options based on your specific goals and possibilities:
- First, we’ll help analyze the options your company provides you regarding your 403(b)/401(k). There may be a second retirement plan to consider.
- If you owe a 401k loan, it becomes due and payable upon termination. Check with us about best ways to take care of that loan.
- You may receive cash; if so, we can help you use it optimally. Frequently we can expand upon your list of what you might do.
- You can usually roll retirement accounts over to an IRA; we’ll help you do that without triggering income taxes.
9. Avoid IRA withdrawal fees. If you MUST withdrawal money from your retirement account because of an emergency, let us know. We’ll do our best to help you avoid expensive fees and penalties. Maybe you should use the 72(t) option.
10. Get Aggressive. Don’t just count on building your retirement merely through savings – you need to proactively make money through investments: stocks, bonds, real estate, and mutual funds. Stocks/mutual funds are liquid and achieve high returns over long periods. Investing in stocks early will help ensure better compounding.
11. Working part-time in retirement? Yes. Some retirees get bored. Working part-time can increase your financial options, give you new social contacts AND keep your nest egg intact and growing.
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Retire or Retire Rich -- Pick One
