Preparing for retirement is essential for anyone, but women often face unique financial challenges that make planning even more critical. With longer life expectancies, time spent out of the workforce for caregiving, and lower average incomes, women need to be extra diligent about saving and investing for their golden years. This retirement advice for women blog covers key steps to take in order to retire with financial security.
7 Best Retirement Advice for Women’s
Review Your Current Financial Situation
The first step is to take a clear-eyed look at where you stand financially. Gather all information about your assets, debts, income streams, and expenses. This includes savings and retirement accounts, pensions, social security payments, mortgages, credit card debt, monthly bills, healthcare costs, and any other financial obligations. Also, factor in any anticipated major expenses coming up like a new car purchase or home repair.
Evaluating your complete financial picture will help identify any potential gaps or shortfalls in retirement savings that need to be addressed. Don’t avoid looking at the numbers because you’re afraid of what you might find. It’s better to know where you stand now while you still have time to make adjustments.
Increase Retirement Account Contributions
Retirement advice for women’s once you have assessed your finances, prioritize boosting contributions to tax-advantaged retirement accounts if possible. For 2023, the contribution limit for 401(k) plans is $22,500 for those under age 50. The limit rises to $30,000 for people 50 and older who qualify for catch-up contributions.
If your employer offers matching 401(k) contributions, strive to contribute at least enough to get the full company match—that’s free money on the table. Contributing to a Roth IRA or traditional IRA is another smart option since you invest pre-tax or after-tax dollars that grow tax-free for retirement.
Consistently increasing retirement contributions over time is one of the best things women can do to maximize nest egg growth. Automate increases to make it easier. Even small bumps in contributions make a difference over the long run.
Take Advantage of Health Savings Accounts
Health savings accounts (HSAs) offer triple tax benefits and can be very advantageous in retirement. HSAs allow pre-tax or tax-deductible contributions and any growth is tax-free. As long as funds are used for qualified healthcare expenses, withdrawals are also tax-free. The account is yours to keep and grows year after year.
If your health plan is HSA-eligible, contribute up to the yearly limit. That’s $3,850 for individual coverage or $7,750 for family coverage in 2023. If you’re 55 or older, you can contribute an extra $1,000. HSAs are a great complement to retirement accounts since healthcare is one of the biggest expenses in retirement. The accounts offer additional flexibility to pay those costs.
Develop Multiple Income Streams
It’s smart not to rely solely on a single source of retirement income. Create multiple income streams from sources like social security, retirement accounts, pensions, part-time work, passive income, and investment dividends. This provides financial protection in case one account runs low or disappears altogether.
Make sure you understand your full Social Security benefits and the best age to begin claiming them. Many women start at age 62 for reduced benefits, but waiting until full retirement age or longer increases monthly income. Working part-time in retirement provides extra funds while keeping active and engaged. Building passive income like book royalties or rentals gives another income source.
Having varied income streams helps ensure adequate retirement cash flow even if one account is depleted or an income source vanishes due to the death of a spouse.
Plan for Long-Term Care Costs
Since women often outlive male spouses, it’s critical to plan for potential long-term care costs in later years. According to the U.S. Department of Health and Human Services, 52% of people over 65 will need some form of long-term care. Costs for assisted living facilities, nursing homes, or in-home care can spiral quickly, so it’s important to have financial resources in place.
Look into long-term care insurance or hybrid policies that offer life insurance plus long-term care benefits. Alternatively, designate a portion of assets to fund potential long-term care needs. Do your due diligence when researching options, as policies and coverage vary greatly. Getting appropriate long-term care insurance gives peace of mind.
Consult Professionals for Guidance
It’s wise to consult financial professionals when creating a retirement plan. An accountant can advise tax-advantaged strategies to grow your nest egg. Investment advisors help analyze investment options like stocks, bonds, annuities, and mutual funds. Estate planning attorneys assist with wills, trusts, and asset protection. Insurance agents educate on options like annuities and long-term care insurance.
Seek referrals from trusted sources when selecting reputable professionals. Thoroughly research credentials, experience, services, and fees. Schedule initial consultations to ensure a good fit before formally hiring anyone. The right expert guidance saves time and optimizes financial strategies.
Adjust the Plan as Needed Over Time
Retirement planning is a lifelong process that evolves over time as income, family status, and goals change. Women’s retirement plans often shift with major life events like career changes, marriage, divorce, the death of a spouse, caregiving responsibilities, health issues, moves, or leaving the workforce early.
Review retirement planning regularly and make adjustments when needed. Update beneficiary designations after major life changes. Recalculate estimated costs and savings requirements annually. Course correct to get back on track toward financial security as life happens. Consistent monitoring and adaptation ensure your plan remains viable.
Planning, saving, and investing diligently for retirement are critical steps for women to take in order to retire comfortably. Seeking guidance from professionals, developing multiple income streams, and adjusting plans over time provide important financial protection too. Implementing this well-rounded retirement advice positions women to enjoy their golden years with greater financial security.
FAQs About Retirement Advice for Women
How much should women save for retirement?
It’s recommended women have around 8 times their final annual salary saved up in retirement accounts by age 67. So if you make $80,000 right before retirement, strive to accumulate around $640,000. Exact savings goals vary greatly depending on income, expected retirement expenses, and other sources of retirement income though.
How can women catch up on retirement savings?
If retirement savings fall behind, a few key steps can help catch up. Try increasing retirement account contributions to the max if possible, even by just 1-2% more. Look for random extra income sources like freelance work or garage sales that can be contributed directly to savings. Cut discretionary costs like dining out or vacations in order to allocate more to savings. Waiting to claim Social Security until age 70 helps maximize monthly income too.
What retirement income sources should women utilize?
Women should aim to create multiple income streams in retirement. This includes social security payments, 401(k) plans or IRAs, pension income, part-time work or side income, annuities, inheritances, rental/business income, and dividends from investments. Having varied sources helps cushion the impact if one income source disappears.
What steps should women take in their 50s to prepare for retirement?
In your 50s, focus on ramping up retirement contributions to the max if you can. Take full advantage of catch-up contributions. Make sure you understand social security benefits and the optimal age to claim. Get serious about shifting assets to more conservative investments. Update estate planning documents and review insurance policies. Develop a concrete retirement budget and financial plan.
How can women ensure their retirement savings last?
Some tips for making retirement savings last include: only withdraw 4-5% of savings yearly, delay claiming Social Security until at least full retirement age, relocate somewhere with a lower cost of living, downsize your home and expenses, work part-time in the early retirement years, invest conservatively as you age, and utilize health savings accounts for medical expenses.