Plan for Income in Retirement
Do you worry about outliving your retirement income? Unfortunately, that’s a real concern for many women. At age 65, women can expect to live, on average, an additional 20.6 years. In addition, many women will live into their 90s, some into their 100s. This means that women should generally plan for a retirement that will last at least 20 to 30 years. Women should also consider the possibility of spending some of those years alone. According to recent statistics, 34% of older women are widowed, 16% are divorced, and almost half of all women age 75 and older live alone! For married women, the loss of a spouse can mean a significant decrease in retirement income from reduced Social Security and/or pensions.
So what can you do to help 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 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?
- If you’re still working, 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 how you can help protect yourself and your family from potentially substantial long-term care expenses. By planning ahead, you could help preserve your choices for care and may avoid becoming a burden on your family.
- Meet with a Financial Planner to find out how to generate more after-tax income from your savings.
What’s your excuse for not planning for retirement?
“I’m too busy to plan.”
Perhaps you’re so wrapped up in balancing your responsibilities that you haven’t given retirement planning much thought. That’s understandable, but if you don’t put retirement planning at the top of your to-do list, you risk shortchanging yourself later on. Staying focused on your goal of saving for a comfortable retirement is difficult, but if you put yourself first it could pay off in the end.
“My husband takes care of our finances.”
Married or not, it’s critical for women to take an active role in planning for retirement. Otherwise, you may be forced to make important financial decisions with limited options quickly during a period of crisis. Unfortunately, decisions that are not well thought through often prove costly later. Preparing for retirement with your spouse could help ensure that you’re both provided for, and pave the way to a comfortable retirement. Odds are you’ll be the last one standing, left with the outcome of his decisions.
“I’ll save more once my children are through college.”
Many well-intentioned parents put their own retirement savings on hold while they save for their children’s college education. But if you do so, you’re potentially sacrificing your own financial well-being. 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 grant! Why not set a good example for your children by getting your own finances in order before contributing to their college fund?
“I don’t know enough about investing.”
Commit to spending just a few minutes a day learning the basics of investing, to help you become knowledgeable. And remember, you don’t have to do it by yourself — a financial professional will be happy to work with you to set retirement goals and help you choose appropriate investments.