As a woman, you may be looking forward to spending your time in retirement differently than the men in your life. Statistically, women are more likely to spend time with family, to socialize with friends, to volunteer, or to care for family members than men are. But that may not be the only difference between the sexes when it comes to retirement. Women are twice as likely to say they are concerned about running out of money.
Not taking your retirement planning seriously may have consequences years or even decades down the road. But you're not alone in focusing on the now instead of the future: When asked about their financial goals, only 17% of all women say that retirement planning is their top priority. The good news is that making a few changes to your financial life today will help ensure that you will be able to do the things you love in retirement—whatever they may be.
The Retirement Paradox
In America, women's pay persistently lags behind men's. Today, the typical woman earns 84 cents for every dollar a man makes. Women also outlive men. Among today's 65-year-olds, the average man will live to age 84.3 while women will average 86.7 years. That's at least two and a half more years that women need to plan for, on average.
The fact that women are paid less, but live longer, shows just how important early planning can be. If you aren't saving already, or if you want to maximize your savings, start with these three steps, then talk with a financial professional about more ways to build your savings and investments:
1. Maximize contributions: The current limit for work-sponsored 401(k) retirement plans is $19,000 per year. By contributing to your workplace retirement plan, you also can capture any company matches that may be offered. Personal IRA accounts allow you to contribute up to $6,000 per year. And, depending on which accounts you select, these contributions may be made pretax, so they are not included in your gross income.
2. Catch up: If you are closer to retirement, you may be able to save even more tax-deferred money. For those over age 50, you can add $6,000 more annually to your 401(k) and $1,000 more to your IRA.
3. Focus on compounding: Put your savings in accounts where the money will grow on its own each year. Use an account offering high-yield interest, or an annuity that can offer the advantages of principal protection, growth, and tax deferral.
63% percent of women say that they cannot focus on their future plans when they have so much on their plates today. A trusted financial professional can take some of that planning off your plate, and work with you toward your near-term and future goals—including retirement.
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