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Women and Retirement: Special Challenges

Published July 28, 2017 by Brady Cobin Law Group, PLLC

Women who are widowed or divorced or those whose careers are impacted by raising children or caring for a loved one, are in a more precarious position than their male counterparts when it comes to retirement finances.

A third of all widows lose their husbands before age 60, and a half of widows lose their spouses before age 65, according to a study by the Women’s Institute for a Secure Retirement. This data presents a hard truth about women and retirement: planning is essential to maintain a quality of life as women age. New Hampshire Business Review’s recent article, “Why retirement planning is so important for women,” details two of the reasons retirement planning is so critical for women.

Women Still Have a Late Start. Despite more gender equality, women still do the majority of childcare. Some women can balance home and work life, but many mothers leave jobs or reduce their hours to care for their children. That means a reduced or no income, making saving for the future difficult. A Society of Actuaries study found that caregivers who leave the workforce lose an average of $303,800 in lifetime earnings.

They live longer. Women outlive men by an average of five to six years, so their financial requirements exceed those of men (they tend to spend more years in retirement). As the Society of Actuaries noted, the average woman spends more years experiencing some form of disability. With healthcare costs rising, planning for disability care is critical to women.

Here are some retirement planning tips:

  • Organization: Keep a list of account numbers, logins, balances, and other important records, in case of a life-altering event. It will allow you to easily determine where you stand. Consider how your income might change due to the loss of your spouse. If you have a pension, look at the survivorship payout, so you’ll know what to anticipate for added income.
  • Control: If you’re single or preparing for that possibility, take responsibility for your finances. Start financial planning and save for retirement now. Start regular 401(k) or IRA contributions or increase contributions to receive your employer’s match.  You should also start saving funds for emergencies. As a woman, you can’t save too much.
  • Estate Planning: A widow can suffer the pain of losing her spouse, and then get another shock when she sees that she doesn’t have an estate plan in place.  In addition to an estate plan, draft medical and financial powers of attorney, so a trusted person can make decisions for you, if you’re incapacitated. It is also recommended that you add designated beneficiaries to your accounts and correctly title your property.

With good planning and an open mind, widows can successfully navigate their senior years. Life is different without a beloved spouse by your side, but it can still be fulfilling. Having a financial and estate plan in place in advance, is important for a rewarding life during this stage.

Reference: New Hampshire Business Review (June 23, 2017) “Why retirement planning is so important for women?”

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