A Retirement Income Roadmap for Women

While everybody needs to plan for retirement, women often face special challenges when planning for this time of life. 

For one, their careers are more likely to be interrupted to care for children or elderly parents. Even if women stay in the workforce fulltime, they tend to earn less than men, on average. As a result, their retirement plan balances are often lower. 

In addition to earning less, women generally live longer than men. This means having to stretch potentially limited retirement savings and benefits over many years.

Don’t dismay. Here are a few tips to help yourself or the women in your life manage these challenging financial realities. 

Participate In Retirement Planning. 

You may be balancing so many responsibilities that you haven’t given retirement planning much thought. Or maybe you’d rather let your spouse take on these duties. That’s understandable, but it’s critical for women to take an active role in planning for retirement. Married or not, make sure you are well-informed and are able to make financial decisions that benefit you. 

Begin Saving Now (if you haven’t already).

Assess how much you’ll need to save to support the lifestyle you want in retirement. An online retirement savings goal-setting calculator can help. If the figure is substantial, don’t be discouraged. The most important thing is to begin saving now.

One of the biggest retirement planning mistakes you can make is to underestimate the amount you’ll need to save by the time you retire. It’s often repeated that you’ll need 70% to 80% of your pre-retirement income after you retire. However, the problem with this approach is that it doesn’t account for your specific situation.

Understand Your Options For Retirement Savings.

If you work outside of the home and your employer offers a retirement savings plan, such as a 401(k) or a 403(b), enroll as soon as possible and contribute as much as you can. These plans make saving easier because your contributions are deducted directly from your pay. Some employers will even match a portion of your contribution.

If your employer offers a pension plan, find out how many years you’ll need to work for the company before you are “vested in,” or own, your pension benefits. Even if you’re staying at home to care for family, you can — and should try to — save for retirement. No matter what your situation, a financial professional can help you evaluate your retirement plan options.

Prioritize Your Retirement. 

Many women will live into their 90s. This means that women should generally plan for a retirement that will last at least 20 to 30 years.

Women should also consider spending some of those years alone. According to recent statistics, 32% of women age 65 and older are widowed, 16% are divorced, and 34% live alone. Be prepared that the loss of a spouse can mean a significant decrease in retirement income from Social Security or pension benefits.

Also, don’t put your retirement savings on hold while you save for your children’s college education. Your children have many options when it comes to financing college — loans, grants, and scholarships, for example — but there’s no such thing as a retirement loan.

Learn The Basics Of Investing

If you’re unfamiliar with common investment terms such as diversification, asset allocation, and compounding, you can broaden your knowledge. A simple web search can reveal hundreds of educational articles and videos. And remember, you don’t have to do it by yourself – a financial professional can work with you to set retirement goals and help you choose appropriate investments.

There is no one-size-fits-all when it comes to retirement income planning. A financial professional can review your circumstances, help you sort through your options, and help develop a plan that’s right for you.

The important thing is for you to be involved.