Women face special challenges when planning for retirement. Often their careers are 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 are often lower. In addition to earning less, women generally live longer than men, and they may have to stretch limited retirement savings and benefits over many years. You’ll need to make retirement planning a priority if you’re a woman to overcome these financial challenges. How?
Begin Saving Now
To help improve your chances of achieving a financially comfortable 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 to consider 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 potentially grow.
The chart below shows how just $2,000 invested annually at a 6% rate of return might grow
Note: This is a hypothetical example of mathematical principles, is used for illustrative purposes only, and does not reflect the performance of any specific investment. Results assume reinvestment of all earnings. Fees, expenses, and taxes are not considered and would reduce the performance shown if they were included. Actual results will vary.
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), consider joining 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 this match is free money. Don’t pass it up! 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.
Most employer-sponsored plans allow you to choose from several investment options (typically mutual funds). If you have many years to invest or you’re trying to make up for lost time, you may want to consider growth-oriented investments such as stocks and stock funds. Historically, stocks have outperformed bonds and short-term instruments over the long term. Although past performance is no guarantee of future results. Unfortunately, bond funds no longer provide the interest value or stabilizing forces as in the past. We see bonds as having very little value in today’s rising rate environment.
However, along with potentially higher returns, stocks carry more risk than less volatile investments. A good way to get detailed information about a stock or mutual fund you’re considering is to check it out on YahooFinance.com or MorningStar.com. It includes information about the fund’s objectives, expenses, risks, and past returns. A financial advisor can also help you evaluate your retirement plan options.
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. Both types of IRAs allow you to make contributions of up to $5,500 in 2017 (unchanged from 2016), or, if less, 100% of taxable compensation. If you’re age 50 or older, you’re allowed to contribute even more — up to $6,500 in 2017 (unchanged