Women & Retirement – Helping Women to Not Outlive Their Money

Women & Retirement – Helping Women to Not Outlive Their Money

Ladies, do yourself a favor and watch this segment of Money Watch. It discusses why retirement planning is a bigger concern for women than it is for men. This is something I’ve been trying to tell women for years. What a lot of women don’t realize is that there are a number of social-economic factors that make the consequences of not taking action and creating a plan devastating to their financial destiny.

The bottom-line is that there are generally three main causes for women’s financial vulnerability in retirement. They are:

  1. Women out live men.
  2. Women make less than men over the course of their working years.
  3. Women retire with less in savings (and less to live on) than men.

How do we as women find ourselves in this predicament?

 

According to the CBS News Money Watch interview with Rebecca Jarvis, a CBS News & Business Economics Correspondent, there are two societal influences:

  1. Financial illiteracy is higher among women. Wharton research shows that women are less literate in their finances than men, which means they don’t invest as wisely over the course of their lifetime.
  2. Women are socialized not to talk about money. Money is considered a taboo topic. As such, it’s not a topic they are accustomed to having with others. We can talk about sex, yes. But not money.

Jarvis offers these six tips for women to get their retirement planning on track. (I added some comments of my own, as well.)

Tip #1 – Get educated and make a plan . There are plenty of resources available to help you increase your financial literacy. Make it a daily habit to consume some sort of financial content. Subscribe to receive my newsletter, for instance.

Tip #2 – Pay off debt. Having high debt payments is the last thing you want in retirement. This is a time you should be reducing your expenditures and living expenses. Focus on paying off your debt with the highest interest rate first. Next, pay off the debt with the next highest interest rate, and so forth. In this way you’re getting rid of the most expensive debt first. Also, call each creditor and ask if they would be willing to reduce the interest you’re paying. Explain that you’re trying to get debt free. It doesn’t hurt to ask, right?

Tip #3 – Start saving today! Don’t wait. Don’t make excuses. Start with 10% to 15% of your income. Have it automatically deducted from your paycheck. Don’t underestimate the power of compounding interest. The sooner you get started the better and it’s never too late.

Tip #4 – Take advantage of company retirement plan. Especially if they offer a match. Hello! That’s free money for you. Plus, your money grows tax-deferred, which means you don’t pay taxes on the contributions now. You’ll pay taxes on the withdrawals (contributions and growth) when you take them.

Tip #5 – Just do it! Think about it. You will never regret cultivating the habit of saving money. Only good things will come of it.

Tip#6 – Get smart about Social Security.  Determining how to take your Social Security benefits is a complex decision with a myriad of possible scenarios. Making the right decision can mean the difference of up to $100,000 or more of Social Security income over the course of your retirement. Although trying to decipher your options can be daunting, it’s definitely worth the time and effort. You can learn more by taking advantage of the information and resources provided at the Social Security website: http://ssa.gov/retire/estimator.html.

But you should be aware that the counselors at the Social Security Administration are not financial planners and they are not allowed to give advice. It would behoove you to do a search in your area for a financial advisor who specializes in Social Security benefits before making any final decisions. Do your homework!

Please note: I reserve the right to delete comments that are offensive or off-topic.

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