Saturday, January 21, 2012

10 Things Women Don't Know about Retirement. And what to do about it.

Dear readers. When we are in our 30s, retirement seems a long way off. There's a lot going, careers, kids in soccer, vacations. But that's the time when women must seriously be thinking about retirement and what it will look like when they are over 60. Having said that, it's never too late to take charge of your long-term financial planning. My mother was an investor into her 80s.
Whatever your age, ask yourself these questions Or better yet, ask your daughter:
- What income will I need when I stop working and where will it come from?
- What plans do I have for being financially on my own if I lose my spouse?
- What can I do right now to bring my retirement goals in line with my current income?
- Worst case, what could happen and how can I prepare?
The 10 Facts listed below summarize what many women don't know but should know about retirement. We offer suggestions for what they can do about it:
Fact No. 1. By the end of our 60s nearly half of American women will be single and financially on their own because of the death of a spouse or a divorce. Women live longer than men and most of us will out-live our spouses. But 20 percent of single women in this country are living at or below the poverty line without savings for retirement. The standard of living for women drops substantially when they become single. For men, less so. What to do: Expect that you will be on your own and plan accordingly by saving more, investing wisely, if not aggressively, and discussing these issues with your spouse and your family.
Fact No. 2 Women don't save enough for retirement or plan for retirement on their own. That's because women are more likely than men to work in part-time jobs. Part-timers are less often eligible to participate in workplace retirement plans. Women also tend to spend money on short-term rewards such as shopping, vacations and kids and women are more likely to interrupt their careers to care for their families. That means less income, less time to participate in a 401(k) retirement plan and lower income to apply to future Social Security benefit payouts. What to do: Of the 61 million wage-earning and salaried women in the U.S. between the ages of 21 and 64, only about 46 percent participate in a retirement plan in any given year -- much lower than the participation rate for men, says the U.S. Department of Labor. Women should be putting the maximum amount allowed into a 401(k) plan or a self-directed Individual Retirement Account. The savings goal should be close to $1 million.
Fact No. 3:  The average American woman who retires at age 65 is likely to live 19 more years -- about three years longer than the average man. Therefore men are less likely to need long-term care insurance because their wives will fill in as caregiver if they become ill. Women on the other hand may need long-term care services. What to do: Long-term care insurance is a way to protect core assets if expensive long-term care is needed. Women should carefully look into that option. There are numerous programs and coverages. Make sure you do your homework before purchasing coverage.
Fact No. 4: Working past full-retirement age is a good way to get the most bang for your retirement buck. Age 80 is the new 65. Regis just retired at 80 from his morning TV show. The number of women working into their late 60s has increased by more than a third in the past 10 years, many because they can't afford to stop working. What to do: Plan to work until your full retirement age of 66 or older. That way you get the highest Social Security benefit payout. This also gives your retirement nest egg more time to grow. Consider part-time work in something that you're passionate about as a way to delay tapping your nest egg.
Fact No. 5: Age-discrimination is alive and well in the workplace. The worst offenders are often younger women who see you as an obstacle to advancement. What to do: Keep your skills up to date, take on new challenges at work, expand your horizons. Be ready to accept change as organizations grapple with market challenges and budget issues. Make yourself valuable. Network for that next great opportunity.
Fact No. 6. Debt reduction is a sure way to a successful retirement. Paying off debt must be a top priority as you approach your 60s. Doing so will bring your lower retirement income in line with your ongoing living expenses and travel budget. What to do: Get rid of debt. Pay off your mortgage. Don't buy things on time. Always pay off your credit cards each month. Set goals that will give you control of your finances and keep you ahead of the curve.
Fact No. 7. You will need $1 million in retirement savings to live comfortably in your later years. That sum can spin off between $2,000 and $3,000 a month. Along with your Social Security benefits your annual income will be between $43,000 and $55,000. Not great but OK. What to do: Save like hell.
Fact No. 8. You can lose weight after 60. Weight loss is a sure way to feel younger and stay healthy. What to do: Losing weight is hard to do on your own. Find a program that works for you and stick with it.
Fact No. 9. In our 60s, some of our long-time friends will drift away as family priorities become more important or spouses retire or die. What to do: New relationships await for those who get out there and meet people.
Fact No. 10. You can continue to work part-time after retirement from the big job. That option gives you more flexibility to travel but still avoid tapping your retirement nest egg. What to do: Match up your passions with a new part-time job. Network with those who might find your skills useful.
Bonus Fact. Sixty is not old. Our 60s are an exciting time in our lives. We're young enough to get out there and explore the world, to live it up, meet new people and find friends or a companion with whom to share life's wonderful joys.  It is possible to fall madly, crashingly in love after 60. What to do: Don't bother with expensive online dating services. Trust your friends to help you meet men who might be a good match. If you find someone, all you need is a pre-nup and some term life insurance to make everybody happy.

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