As we celebrate International Women’s History Month, it’s important to recognize the unique financial challenges that women face as they approach retirement.
The gender pay gap, longer life expectancies, and potential career interruptions to care for children or elderly family members all impact a woman’s ability to save for retirement. In this blog, we’ll provide some crucial tips for women like you, so you can learn how to create a solid financial plan for a comfortable future.
Here’s what you need to know.
Start Saving Early
The earlier you start saving for retirement, the better. As a woman, you may need to save more than your male counterparts due to the gender pay gap and longer life expectancy. It is recommended that women should aim to save at least 15% of their income each year. This may seem like a daunting goal, but even small increases in savings rates can have a big impact over time.
If you’re still in the workforce, you should also take advantage of any employer-sponsored retirement plans, such as 401(k)s, and consider opening an individual retirement account (IRA) to supplement your retirement savings. By starting early and taking advantage of all available retirement savings options, you can help ensure a secure financial future in retirement.
Consider Delaying Retirement
Delaying retirement can have a significant positive impact on a woman’s retirement savings. By delaying retirement, you can continue to save and invest, and allow your investments to grow over time.
Additionally, delaying retirement can increase Social Security benefits. Any American woman (or man) can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent. With delayed retirement credits, you can receive your largest benefit by retiring at age 70.
This can make a big difference in a woman’s retirement income and can help ensure a comfortable retirement. However, it’s important to weigh the benefits of delaying retirement against the potential drawbacks, such as missing out on time with family or health issues. An experienced retirement income planner can help you evaluate your options and make more informed decisions.
Taking the Investment Leap
Traditionally speaking, women are less likely to invest than their male counterparts. But that doesn’t mean the interest isn’t there. In fact, nearly 40% of women over 35 regret not investing for retirement sooner, according to a 2022 Money Moves study.
On the plus side, a Wells Fargo study found women were optimistic about their ability to achieve short- and long-term investment goals and have become increasingly assured that the stock market is a good place to invest.
So what helps women take the investment leap? Professional guidance. Their study also found that women are more likely to invest with help from an investment professional, and more inclined to stick to their investment plan.
Invest in a Diverse Portfolio
When investing for retirement, it’s important for women to have a diversified portfolio to help manage risk. Diversification means investing in a mix of stocks, bonds, and mutual funds to spread out investments. AKA, “not putting all your eggs in one basket” by spreading your investments across multiple asset classes.
This can help ensure that if one investment performs poorly, it won’t have a significant impact on the overall portfolio. Furthermore, it’s essential to review and rebalance the portfolio regularly to keep it in line with your investment goals and risk tolerance. As a woman, seeking the advice of a retirement income advisor near you can help you make informed investment decisions and help ensure that your portfolio aligns with your retirement goals.
The right advisor can also provide guidance on how to adjust your portfolio over time as life circumstances adapt.
Plan for Healthcare Costs
While women are generally healthier and live longer than men, this doesn’t mean you should dismiss healthcare concerns and related costs. Instead, you should be saving more. This is because while living longer, you have to make your money last longer. And the longer you live, the more health issues you will most likely face.
This is why healthcare expenses tend to increase as people age, and these costs can have a significant impact on retirement savings; with Americans now facing an average cost of $315,000 on health care in retirement.
One way to prepare for these costs is to invest in a Health Savings Account (HSA) that allows individuals to save pre-tax dollars to pay for qualified medical expenses. HSAs offer tax benefits and can help women save money specifically for healthcare costs in retirement.
Additionally, it’s important to understand what Medicare covers and what out-of-pocket expenses may need to be paid. Medicare does not cover all healthcare expenses, and you may need to pay for deductibles, copays, and other costs out of pocket (like long-term care). You should review your healthcare needs, research the various Medicare plans available to you, and plan for any additional healthcare expenses not covered by Medicare.
By planning ahead for healthcare costs, you can take another step closer to achieving a comfortable retirement.
Review and Adjust Your Plan Regularly
Retirement planning is not a one-and-done task. It’s essential to review and adjust your retirement plan regularly to ensure that you are on track to meet your goals. Life events such as marriage, divorce, or death of a spouse can impact your retirement plan and may require adjustments.
Working with an experienced retirement income planning firm like APO Financial can help you create a comprehensive retirement plan that takes into account all the factors listed above, and can also help women like you stay on track towards your retirement goals as your circumstances change.
Retire with Confidence
While the specifics behind the “perfect retirement” might differ from woman to woman, they tend to be centered on one core idea – having the time, freedom and resources to live your life as you choose. APO Financial’s trusted Fiduciary advisors can provide expert advice on how to save for retirement, how to manage investments, and how to plan for potential healthcare costs.
With decades of combined experience working with female retirees and pre retirees, our qualified professionals don’t just point you down a path to retirement, we walk alongside you to help you reach your full retirement stride.
Women approaching retirement face unique challenges when it comes to planning for their golden years. By starting to plan early, delaying retirement if possible, investing in a diverse portfolio, planning for healthcare costs, and regularly reviewing/adjusting your plan, you can help ensure a successful and comfortable retirement outlook.
Ready to get started? Contact the trusted Fiduciary advisors at APO Financial today to learn how we can help you achieve your retirement goals.
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Annuities can be an important part of an overall portfolio but may not be appropriate for everyone. Before purchasing an annuity, it is important to understand the details of the product. Certain products may not be available in your state. The terms of each indexed annuity varies. It is always important to speak to a financial professional. about an annuity’s features, benefits and fees, and whether an annuity is appropriate for you, based on your financial situation and objectives. Participation rates, cap rates and/or index spreads may be subject to change by the insurance company according to the annuity contract provisions. If the insurance company makes such changes, this could adversely affect the return. Guarantees of an indexed annuity are backed by the claims-paying ability of the underwriting insurance company. The surrender charge period for a product may be longer, and the surrender charges may be higher than other annuity products. Indexed annuities are long-term investments. If the annuity contract is surrendered early, there is the possibility of a surrender charge being imposed and/or the funds may be subject to income taxes. The IRS may also impose a 10% penalty on withdrawals prior to age 59 ½, depending on the circumstances. With indexed annuities, there is the potential to lose money, depending on the product charges and minimum guarantee contract provisions. For additional information on annuities, reference the following websites: The FINRA (www.FINRA.org), the Securities and Exchange Commission (www.SEC.gov), Insured Retirement Institute (www.irionline.org), the National Association of Insurance Commissioners (www.NAIC.org) or your state’s insurance department.