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 Melissa J. Ackerman, CRPC, is
an Advanced Financial Advisor
with Ameriprise Financial
Services, Inc., 2100
Georgetowne Drive, Suite 500
Sewickley, PA 15143
Office: 724.799.2778
Fax: 724.934.2369
Melissa.j.ackerman@ampf.com
ameriprise.com
Women and
Retirement Planning
Women face special challenges when planning for retirement.
Because their careers are often 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 face having to stretch limited
retirement savings and benefits over many years.
To meet these financial challenges, you'll need to make retirement
planning a priority.
Begin saving now
To maximize your chances of achieving a financially secure
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 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 grow.
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), join 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. 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.
Women struggling to balance work and family sometimes
shortchange their retirement savings by leaving their jobs before they
become vested in their pension benefits. Keep in mind, too, that
because your pension benefits will be based on your earnings and on
your years of service, the longer you stay with one employer, the
higher your pension is likely to be.
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 $5,000 in 2008 ($4,000 in
2007), or, if less, 100 percent of taxable compensation. If you’re age 50
or older, you’re allowed to contribute even more – up to $6,000 in 2008.
Plan for income in retirement
Do you worry about outliving your retirement income? Unfortunately,
that’s a realistic concern for many women. At age 65, women can
expect to live, on average, an additional 19.8 years.* In addition, many
women will live into their 90s. This means that women should
generally plan for a long 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, 43 percent of older
women are widowed, 11 percent are divorced, and approximately 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 Social Security or pensions.
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 will really 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 quickly during a period of crisis.
Unfortunately, decisions that are not well thought through often
prove costly later. Preparing for retirement with your spouse will
help ensure that you’re both provided for, and pave the way to a
worry-free retirement.
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 security. 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! 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, and you’ll become knowledgeable in no time. 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.
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