Women spend a significant portion of their lives putting their families first, tending to the needs of husbands, children and aging parents often before themselves. The problem is that as these women approach retirement age, they are finding themselves without the benefit of ample savings to carry them through their golden years.
According to the U.S. Census Bureau’s most recent statistics, working women earn 82 cents for every dollar earned by men even though women make up almost half of the workforce, receive more higher-education degrees than men and are often a family’s sole source of income. Women also tend to live longer than men and are at greater risk of exhausting their savings during their lifetimes, which is one reason why almost half of all unmarried and/or widowed women age 65 and older depend on Social Security benefits to provide 90 percent or more of their total income. Yet, the estimated average Social Security benefit for a retired worker in 2023 is $1,827 a month – far from enough to fund a comfortable lifestyle and sustain one’s financial stability over the long-term.
Following are four tips to help women balance their roles as family breadwinners and caregivers while providing much needed TLC to their own personal financial needs.
Make Retirement Planning a Priority when you are Young
Retirement may be the furthest thing from your mind when you graduate college, secure your first job or start a family. However, time moves quickly, and the sooner you begin savings for your future, the more secure your future will be. Waiting until your children are grown and out of the house, is too late. Do you want to spend your 50s and 60s playing catch up and saving for the future, or do you want to enjoy the fruits of your many years of labor? Make retirement savings a line item on your household budget as early as possible and commit to make it a priority.
Recognize the Reality of Rising Expenses in Retirement
Unfortunately, as we age, we require more medical attention and assistance with daily activities. The costs for all of these forms of care, including medications, in-home nursing services and post-surgery rebab stays, are almost certain to rise in the future. Be realistic about how much you will need to not only survive but to also thrive in your older years. While Social Security may help you supplement the costs of your required care in the future, you should not rely on it as your sole source of income in retirement.
Flex your Financial Independence with a Retirement Savings Plan Just for You
Many married couples plan for retirement together, drafting wills and estate plans while contributing to their individual workplace 401(k) retirement accounts. However, not all women work outside of the home and, even when they do, they may not have access to an employer-sponsored retirement benefit plans. Moreover, with women outliving men, it is likely that you will have the sole responsibility of making all of your financial decisions for yourself in the future. Why not get a head-start on your financial education while you’re young?
Consider what you can do to establish a retirement plan for yourself, separate from your spouse, in order to provide you with both financial independence and long-term care over your lifetime.
If you are a married, non-working spouse, the tax laws provide an opportunity for you to annually contribute money to a spousal individual retirement account (IRA), provided that your spouse is employed and the two of you file taxes jointly. For 2023, you and your spouse may individually contribute up to $6,000 each to an IRA, or $7,000 per account if you are older than 50, if the total amount of contributions does not exceed your joint taxable income.
If both you and your spouse work, you may also qualify to make annual IRA contributions. However, depending on your taxable income and your access to a workplace retirement plan, you may not receive the full benefit of a tax deduction in the year of your contribution.
Understand Social Security Benefits
Social Security benefits can provide a financial cushion to an already adequate amount of retirement savings. However, it does require families to engage in advance planning before they reach the age of 62, which is the earliest they may begin taking Social Security benefits. In general, the longer one waits to start taking withdrawals, the higher his or her annual payout.
Additionally, because Social Security offers spousal and survivor benefits, even to a divorced spouse, it is important for couples to develop and follow a well-thought out strategy to ultimately maximize the value of their potential Social Security benefits.
In life, there are few guarantees. However, the more you prepare for an unknown future, the more likely you will survive and thrive. Women, in particular, should recognize that shifting their focus away from their roles as caregivers to their own personal needs, is not only selfless, it is an invaluable gift to your family.
About the Author: Olga Ismail is a retirement plan consultant with Provenance Wealth Advisors (PWA), an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors + CPAs, and a registered representative with Raymond James Financial Services. For more information, call (954) 712-8888 or email info@provweath.com.
Provenance Wealth Advisors (PWA), 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.
Olga Ismail is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC. Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors + CPAs. PWA is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of PWA and not necessarily those of Raymond James. You should discuss any tax or legal matters with the appropriate professional. The information contained in this report has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.
401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Investing involves risk, investors may incur a profit or loss regardless of the strategy or strategies employed. Future investment performance cannot be guaranteed. Matching contributions from your employer may be subject to a vesting schedule, please review your retirement plan documents or consult with a financial professional for more information.