Women Must Plan For Their Own Retirement

Most women have the bad habit of taking care of everyone and everything in their lives before they take care of themselves.  As a whole, women tend to delay assessing their financial outlook and making a retirement plan due to their tendency to put their needs last.  Pursuing a career, raising a family, supporting children through college,

assisting aging parents with their health needs, divorce and widowhood are some of the obstacles that can come between a woman and her financial security.

Regardless of age or economic status, most women would like to know that they will have a financially secure retirement. Unfortunately, many are ill equipped to attain that goal.  Ladies, it’s time to put yourselves first and take a look at your true financial picture. If you don’t like what you see, take action and get a financial makeover.  Be honest and ask yourself a few key questions: Are you saving and investing enough for retirement, considering your desired annual income and projected inflation rates? Should your investments be more conservative or more aggressive? Can you afford to carry debt into retirement? Should you defer retirement for a few years or at least work part-time? How will you spend, save, or invest any expected inheritance? What would you like to leave to your children or your favorite charities?

When women try to determine whether they are saving and investing enough, questions about Social Security often arise. It’s easy to understand the uncertainty about how much to expect in Social Security benefits, especially in the current political climate. Over a lifetime, women typically earn less than men and drop in and out of the work force more frequently to stay home with their children. Many women do not know that working at least 10 years is usually enough to qualify for Social Security benefits. A woman who has not worked may be eligible for half the benefits of her spouse, even in the case of a divorce. An ex-spouse could often be eligible (even if the original spouse is remarried) if she was married to the worker for at least 10 years, and she has been divorced for at least two years.

One of the most common questions about Social Security is whether it makes sense to work to full retirement age, or to retire early and receive less benefits for a longer period of time. The potential benefit calculator on the Social Security website,

http://www.socialsecurity.gov/planners/benefitcalculators.htm can offer some insight. The calculators provide a retirement benefit estimate based on your intended retirement date and past and projected earnings. The calculators also show disability and survivor benefit amounts should you become disabled or die. Some women want to know how much income they can earn after retirement and still receive full Social Security benefits. As with all specific retirement and Social Security questions, it’s best to consult a financial planner, investment adviser, or CPA. You will need to consider your projected tax rate after retirement, since Social Security benefits are taxable.

A recent survey revealed that although women have made progress in their knowledge about money and investing, they still have work to do. Only about 40 percent of women surveyed considered themselves very or somewhat knowledgeable about investing, and only half have invested for retirement.

Hopefully, women realize that a solid retirement plan should include investments. If they have the opportunity, they should make the maximum contribution to their 401(k).  For women who are self-employed or own a small business, they can consider opening a Simplified Employee Pension plan. Women who stay at home to raise their children deserve to pay themselves through contributing to a traditional or Roth IRA. Ask your

working spouse to make that contribution. A good starting point for learning about savings and investment options is www.360financialliteracy.org/.  This resource, sponsored by the American Institute of Certified Public Accountants, provides many articles, tools, and resources on topics such as retirement planning, IRAs and government benefits. Also, women should ask their company’s human resource department or investment firm about available financial literacy courses.

No retirement plan is foolproof. Unexpected events such as a serious illness, disability, or death in the family can change even the best financial intentions. Still, with women outliving men by seven years on average, they owe it to themselves to make their own financial security a top priority.