Women and Retirement Planning

By Adam Soloff

Women face special challenges when planning for retirement. Because their careers are often interrupted to care for children or elderly parents, women may spend less time in the workforce and earn less money than men in the same age group. As a result, their retirement plan balances, Social Security benefits and pension benefits often lower. In addition to earning less, women generally live longer than men, and they face having to stretch limited retirement savings and benefits over many years. To meet these financial challenges, you’ll need to make retirement planning a priority.

Begin Saving now

To maximize your chances of achieving a financially secure retirement, start with a realistic assessment of how much you’ll need to save. If the figure is substantial, don’t be discouraged—the most important thing is to begin saving now. Although it’s never too late to save for retirement, the sooner you start, the more time your investments have to grow.

Save as Much as you can—you Have Many Options

If your employer offers a retirement savings plan, such as a 401(k) or a 403(b), join it as soon as possible and contribute as much as you can. It’s easy to save because your contributions are deducted directly from your pay, and some employers will even match a portion of what you contribute. If your employer offers a pension plan, find out how many years you’ll need to work for the company before you’re vested in, or own, your pension benefits. Keep in mind, too, that because your pension benefits will be based on your earnings and on your years of service, the longer you stay with one employer, the higher your pension is likely to be.

Save for Retirement—no Matter What

Even if you’re staying at home to raise your family, you can—and should—continue to save for retirement. If you’re married and file your income taxes jointly, and otherwise qualify, you may open and contribute to a traditional or Roth IRA as long as your spouse has enough earned income to cover the contributions.

Plan for Income in Retirement

Do you worry about outliving your retirement income? Unfortunately, that’s a realistic concern for many women. At age 65, women can expect to live, on average, an additional 19.8 years. In addition, many women will live into their 90s. This means that women should generally plan for a long retirement that will last at least 20 to 30 years. So what can you do to ensure you’ll have enough income to last throughout retirement? Here are some tips:

Estimate how much income you’ll need. Use your current expenses as a starting point, but note that your expenses may change dramatically by the time you retire.

Find out how much you can expect to receive from Social Security, pension plans and other sources. What benefits will you receive should you become widowed or divorced?

Set a retirement savings goal that you can work toward and keep track of your progress.

Save regularly, save as much as you can, and then look for ways to save more—dedicate a portion of every raise, bonus, cash gift or tax refund to your retirement savings.

Consider purchasing long-term care insurance to protect your retirement savings and income from the high cost of nursing home care.

Adam Soloff is the President of Soloff Wealth Management Group.