Women and Retirement Planning: Part III
Women face special challenges when planning for retirement. In this blog series we will explore the challenges and provide tips and resources for women as they take the next steps in their retirement planning journey.
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 2018, 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 2018.
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 20.5 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, 34% of older women are widowed, 13% 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.
So what can you do to 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 dramatically 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?
- 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 purchasing long-term care insurance to help protect your retirement savings and income from the high cost of nursing home care.
*Source: National Vital Statistics Report, Volume 66, Number 3, 2017
**U.S. Department of Health and Human Services Administration on Aging, A Profile of Older Americans: 2016
To view the complete white paper "Women and Retirement Planning" please click here.
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