According to the Centers for Disease Control and Prevention, once Americans reach age 65, life expectancy is an additional 20.6 years for women and 18 years for men. Women are living longer and therefore more is needed to cover expenses during their retirement years. Statistically, women lag behind men in planning and saving for retirement, yet research has proven that women are more responsible with their money.
The Transamerica Center for Retirement Studies found that half of all women are not confident in their ability to retire. Often, they lack the confidence in their retirement planning to feel secure during the second phase of their lives. Women are much more cautious by nature when it comes to financial matters. There are many strategies and tactics one can employ to help build confidence in their portfolio. Consider working one more year. Although this might not be a viable option for everyone, it is certainly something to consider for those trying to build their nest egg. Part-time work, whether it is with your current employer or somewhere else, provides guaranteed income along with a sense of purpose. Taking advantage of workplace savings accounts by maximizing your contributions to both a 401(k) and IRA are extremely sound financial decisions. And, if you are over the age of 50, additional dollars can be contributed which can help grow these accounts more quickly.
Only 19% of women have a backup plan if they are forced to retire. The working world is very different today. Individuals born in the 1930’s or 1940’s might have only changed jobs once or twice during their working years. Today, someone in their thirties may change employers upwards of 5 to 7 times. Unpredictability in the workforce is rampant and having a backup plan for your future is just as important as the time and resources you put into your current position. Keeping your options open by fine-tuning your skills or developing new ones are all great ideas for futuristic decisions that could be out of your control. Being prepared is key!
38% of individuals believe they understand Social Security. This number is extremely low therefore it is very important for women to educate themselves on the ins and outs of Social Security.
What women need to do to protect themselves:
- Develop Retirement Strategies
Create a well thought out and comprehensive retirement plan. Your plan should identify what income you will receive during retirement, what lifestyle you envision living during these years and what expenses will be incurred. Factor in things like inflation and long-term care costs into the equation. Take the time to research and analyze your accounts and future assets. You want to enter the second phase of your life feeling secure and confident in your financial decisions.
- Understand Asset Allocation
It is important to understand the various financial options including bonds, stocks, annuities, and CDs. And, just like each person’s financial goals vary, so should the allocation of assets. Ideally, your investments should be posed for growth before retirement and during retirement, your goal needs to be preserving your principle.
- Review Their Plans
Once your retirement plan has been developed, you need to take the time to adjust and modify accordingly. Identifying potential risk and rebalancing your portfolio to maximize the account value is one of the easiest ways to minimize your risk. And, as mentioned earlier, have the confidence knowing your plan will work long term.
Women are living longer. Invest in your future by taking the time to understand your financial status. Develop a retirement strategy, educate yourself on potential asset allocation and then take the time to review your retirement plan and make modifications and adjustments when necessary.