Published on March 25, 2021
Written by The Servion Financial Advisors Team
When it comes to financial progress, women face a few challenges, but they can be approached constructively through careful planning. For one, women tend to live longer than men, meaning women often spend more time in retirement and therefore need to have adequate resources to sustain that longer post-work life. Then there is the pay gap. A 2019 study showed that women receive just 82 cents for every dollar earned by men. And, plenty of women out their careers on hold to have children and raise a family. These realities can hamper a woman's ability to save.
But these challenges can be overcome. Here are five ways women can get ahead of the savings game.
The average lifespan of an American woman is five years longer than an American man. A Medicare study in 2012 found that 76 percent of women over the age of 85 were widows. There are many financial implications of this longevity, including the need to maximize savings during the working years and budgeting carefully to make those dollars last longer. Women may also want to consider steps such as buying long-term care insurance, which can cover many of the expenses associated with assisted living or in-home care as you get older.
On average, women retire at age 62 versus age 64 for men, according to the Center for Retirement Research. One reason for this is that women are often younger than their spouses and many couples decide to retire at the same time. But working a few extra years could be a good idea because it gives you a few more years to contribute to your savings rather than drawing from it.
You can retire and start taking Social Security benefits as early as age 62, but you will not receive the full benefit amount. In fact, at age 62 you would only receive 75 percent of your full benefit amount. This can be a difference of hundreds or even over one thousand dollars a month. The longer you stay in the workforce, the more Social Security benefits you'll receive. But keep in mind, you will not accrue additional benefits by working past age 70.
Women are more likely to hold part-time jobs that don't qualify for retirement plans or take time away from their careers to raise families, during which they aren't contributing to retirement plans. In fact, according to the Department of Labor, less than 50 percent of American women participate in a 401(k) or IRA.
If you have a spouse, you can address this kind of challenge by having the spouse contribute to an IRA on your behalf. Your spouse can contribute even if you are not earning income for a period of time. The bottom line is that spouses can and should plan together to stay on track for retirement, even during times when one of them may not be working.
Women should never be afraid of asserting themselves and taking control of their own savings. Whether you are single or married, it can be a good idea to visit a financial advisor and get their input on things you can do to position yourself for a comfortable retirement. An advisor may, for example, be able to recommend investment strategies that could help your nest egg get bigger and last longer.
Servion Financial Advisors is always ready to help women (and couples) work toward their savings and retirement goals. Visit our website to meet our team and for more information.
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