Women and financial planning: Taking control of destiny

Women and financial planning: Taking control of your financial destiny

When it comes to women and their money, there’s a lot to celebrate. Women have achieved broad-based financial successes over the last few decades and continue to make impressive financial gains.

While women have many money milestones to celebrate, we still face a range of gender-specific financial challenges. The greatest financial challenge may lie in the future, when millions of baby boomer women begin their retirement. Experts predict that many of the women retiring over the next 20 years will have less than one-third of the income necessary to retire comfortably. Why are women more likely than men to face serious financial shortfalls in retirement? The key reasons include:

> Longer lives Women live longer than men and can expect to fund longer retirements. These longer retirements increase the chances of women outliving their savings and depending on Social Security benefits.

> Lower lifetime incomes and pension benefits Women retirees receive about half the average pension benefits that men receive. This is partly due to the fact that many women work in part-time positions and tend to change jobs more frequently than men. In addition, the average woman is likely to spend approximately 12 years out of the workforce caring for children and elderly relatives. This reduces her lifetime earnings and retirement savings, and impacts her ability to vest in a pension or pay into Social Security.

> Living alone Women are increasingly living alone: A third of women who become widowed are younger than age 60, and half of all women who will become widowed become so by age 65. Only 21% of widows receive survivor pensions from their husband’s benefits, and the average widow receives less than half the Social Security benefits of a married couple. Yet few women take steps to prepare for the loss of a spouse and the financial consequences of living alone.

Despite these hurdles, women can take control of their finances, plan for comfortable retirements and help to ensure their future economic security. Financial planning is one proven strategy that empowers women to address unique money issues, reach financial goals and work towards achieving dreams.

How to take advantage of potential financial challenges:

1. Take control by helping make the financial decisions at home.

2. Invest more to make up for potential retirement benefit discrepancies. Consider how much risk can be taken in exchange for the potential to earn higher returns.

3. Participate in employer plans by taking advantage of all possible company matches and tax-deferred contributions.

4. Do not depend on pensions or Social Security. The potential for fewer years in the work force and lower pay contribute to lower benefits for women.

5. Get out of debt. Understand how much you’re spending and explore ways to reduce your expenses.

6. Do tax planning. Today, more women own homes and businesses and qualify for property tax deductions.

7. Keep your retirement top of mind. Statistically, women tend to live longer than men plan to save 12% of your gross income for retirement.

8. Consider your insurance needs. Longer life expectancies, higher rates of disability and chronic health problems increase the need for long-term care offerings.

9. Use resources. Helpful financial information is easily accessible on the web and at public libraries.

10. Seek help by meeting with a qualified financial advisor.

Sara-Marie Pons focuses on women’s financial strategies as a financial advisor with Ameriprise Financial Services, Inc. To learn more information, please mail Sara-Marie at sara.m.pons@ampf.com. Sara-Marie is licensed/registered to do business with U.S. residents only in the states of MA, NH, NY, PA and ME.