What Will Your Retirement Look Like?

Did you know that for women 65 and older Social Security represents two-thirds of their income? Without Social Security, an estimated 58% of widows (age 65+) would live in poverty, according to a 2010 U.S. Congress Joint Economic Committee report. With inflation and other economic pressures, women who are relying on Social Security income in retirement may be faced at some point with choosing between food or medicine, rent or car repairs, or a myriad of other financial dilemmas.

Did these women envision such a meager future? Probably not. More than a few probably wish they had understood money matters better or actively invested for retirement.

You have the power to change your future by being aware what kinds of situations influence your ability to save for your retirement and by taking proactive steps now to prevent problems in the future.

Know that these factors will influence your ability to earn, save and not outlive your money in retirement:

Women spend on average 12 years out of the workforce. Often this is due to women taking on caregiving responsibilities—for children or adult family members. That means they have 12 fewer years than men during which they are putting money into their retirement funds.

Women live longer. On average, they live five years longer than men: 80.5 years versus 75.5 for men, according to the Centers for Disease Control and Prevention. But they may actually spend a decade or more on their own, due to divorce or widowhood.

Women face an earning gap. Women earn just $0.78 for every dollar that men do, according to the Government Accounting Office. And the gap is even larger for women of color.

Here are some areas where you can be proactive about ensuring a financially successful retirement:

Make sure you are getting paid what you are worth at work. Some women are reluctant to negotiate a better salary. Don’t worry that it will seem too aggressive; men do it all the time. It takes confidence and probably a little research to affirm your professional worth with your boss, but you need to do it.

Don’t equate a rich spouse with a retirement plan. Remember, only fate knows where that spouse and that money might end up someday.

Make sure you have a plan in place. The smartest move is to sit down with an advisor who can walk you through what you may need now, such as life insurance (for both you and your spouse, if you’re married), disability insurance and a solid investment strategy for your retirement. As you reach your middle years, long-term care insurance becomes an important consideration so you don’t destroy your retirement nest egg, should you or your spouse need care.

Preparing for a sound retirement requires focus, patience and dedication. But most importantly, it requires you to take that first step. I urge you to do it now.

  1. Before working with a comprehensive financial planner, a client should establish that the planner is competent and worthy of trust, and will act in the client’s interests rather than being primarily interested in selling the client financial products for his own benefit.

  2. The answer to this depneds on both your income and the interest rate on your debt.Both mortgage interest (almost always deductable) and student loan interest (if you make <~$50K annually) are tax deductable. Therefore even if your interest rate is 6%, your effective after tax interest rate would be 4-5%. At those effective rates, you are much better off putting money away for retirement, because your after tax rate of return will likely be in the 7-8% range over the long term.You would also be giving up your mortgage interest deduction if you paid off the mortgage earlier. That is rarely a good idea, particularly if you are single, since the deduction will be worth more to you than if you are married. You will likely also have to stop itemizing your taxes if you don't have the mortgage interest deduction to put you over the standard deduction, so you will lose out on some additional tax breaks you otherwise would have been able to claim.References :

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