Women and Retirement Planning

National Retirement Planning Week® is of particular interest to women. 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 may face having to stretch limited retirement savings and benefits over many years.

To meet these financial challenges, women need to make retirement planning a priority.

Begin saving now

To help improve the chances of achieving a financially comfortable 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 potentially grow.

Save as much as you can

If there is a retirement savings plan, such as a 401(k) or a 403(b) offered at work, join it as soon as possible. Contribute as much as you can. Contributions are deducted directly from pay, and some employers will even match a portion of the contribution.

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 a woman chooses to stay at home to raise a family, she can–and should–continue to save for retirement. A married woman who files income taxes jointly, and otherwise qualifies, may open and contribute to a traditional or Roth IRA as long as her spouse has enough earned income to cover the contributions. Both types of IRAs allow you to make contributions of up to $5,500 in 2015 (unchanged from 2014), 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 2015 (unchanged from 2014).

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.1 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. According to the U.S. Census Bureau, women own almost 30% of nonfarm businesses. If you're self-employed or own a small business, look into retirement savings options tailored to your needs, including individual 401(k) plans, Keogh plans, SEP plans, and SIMPLE IRAs and 401(k)s.3

So what can you do to help 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 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 how you can help protect yourself and your family from potentially substantial long-term care expenses. By planning ahead, you could help preserve your choices for care and may avoid becoming a burden on your family.

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Some of this material has been provided by Broadridge Investor Communications Solutions, Inc.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances.
Member FINRA & SIPC.

Sources:

1NCHS Data Brief, Number 168, October 2014

2 U.S. Department of Health and Human Services Administration on Aging, A Profile of Older Americans: 2013

3 United States Census, 2007 Survey of Business Owners (most current data availabl