It’s common knowledge that many Americans—of both genders—are at risk of underfunded retirement. For women, the risk is intensified. Historically lower wages relative to men’s wages and time out of the paid workforce to care for family can mean that women save less and have less saved for their retirement. Women also, generally, live longer than men. On average, a female at age 65 can expect to live another 20 years, two years longer than a man the same age.* Savings can increase a woman’s chances of having enough money to last during her retirement.
Don’t let this risk define your future. Rather, use the information to inform the decisions you make, and actions you take, today.
Contribute the maximum amount to your retirement savings plan at work.
Save what you can, then save a little more. In 2014, you can defer up to $17,500 of your compensation. If you’re age 50 or older, an annual catch up contribution of $5,500 is allowed. Taking advantage of an employer’s 401(k) match is a critical piece of proper retirement planning. At a minimum, contribute enough to your 401(k) or other retirement plan to get the maximum employer match available (if applicable).
Look for other ways to save.
If your employer does not offer a retirement plan, or you are self-employed, discuss other options with your tax advisor. A traditional IRA or Roth IRA can provide retirement savings as well as tax advantages now and in the future. Simplified Employer Plans (SEPs) and Individual 401(k) plans offer higher contributions for self-employed individuals.
Put the money away, but make sure it’s working.
Seek the advice of an investment professional to align your investment choices with your financial goals. When it comes to preparing for your retirement, taking a little risk now can pay big rewards in the future.
Round up all the “eggs” as you build your retirement nest.
Consolidate retirement plans from previous employers by rolling them into an Individual Retirement Account. This will maintain the tax deferral status of the money and give you a clearer picture of your retirement portfolio.
* U.S. Department of Labor
Hold the date!
Join Marivic Hammond, Senior Investment Advisor, with colleagues and friends for a wine and cheese gathering, the next event of The Women’s Roundtable: “Taking Charge of Your Financial Future” on March 26, 6 – 7:30 pm in our Oakland office.