Women’s Retirement Planning Options

Tomorrow is Women’s Equality Day. At Johnson Wealth and Income Management, we stay true to the core values upon which our company was built: on our advancements with respect to equal opportunities in numerous areas, including helping to aid financial strength. 

Women’s Equality Day commemorates the passage of the 19th Amendment to the U.S. Constitution, which was granting the right to vote to women. The amendment was first introduced in 1878. In 1971, the U.S. Congress designated August 26th as Women’s Equality Day. Women have since then come a long way in the workforce. Women’s circumstances and their choices in preparing for retirement have varied greatly. Since women on average have longer life expectancies, they will have to provide for themselves in retirement longer than men. 

Yet, women earn less than men and participate in the workforce more sporadically. According to Bureau of Labor Statistics data, in 2020, women’s annual earnings were 82.3% of men’s, and the gap is even wider for many women of color. Though women only made 57 cents per dollar earned by men in 1973 when this Department of Labor PSA was made, progress has stalled and we’re still far from closing the pay gap. As a result, they tend to amass less in retirement savings. And women — particularly unmarried women, are less likely than men to say they are very confident about having enough money to live comfortably in retirement. Here are some retirement planning options to consider.

Start Saving ASAP

Kick start your savings by putting aside small amounts when you’re young, or as soon as possible. Over time the money will accumulate. It’s also never a bad time to sign up for your employer’s 401k and similar workplace plans.

Even if you can’t contribute the maximum, aim to contribute at least enough to qualify for any employer match. You can also open a traditional or Roth IRA. If you are self-employed or work part-time, as many women do, you have even more choices, such as a Simplified Employee Pension (SEP), a SIMPLE IRA or a solo 401(k).

Don’t panic if you haven’t started your retirement journey, there are ways that could help you catch up!

Pay Down Debt

Understand your payoff picture. Make a spreadsheet of all the debts on your balance sheet that includes the payments of each item, and the time it will take to pay them off at your current pace. Are you helping your children with student loans? Do you have a mortgage on a second home, or a loan on a vehicle? It can be eye-opening (and motivating) to see what’s outstanding and what it looks like to get your debts to zero. Start by using an online financial calculator here.

Next, make a debt pay-off plan that includes how much you can put toward debts each month, and how long it will take you to pay them off. Consider that the sooner you can pay off anything outstanding, the more capital you’ll have to put toward saving and investing. A home loan is usually the largest chunk of debt in your portfolio. It’s not necessarily bad debt, but it’s smart to take steps to enter retirement without that recurring bill on your balance sheet. Use an online mortgage calculator to make sure you’re on track to wipe out that debt by the time you quit working.

Long Term Care Insurance

Only 35% of people who choose to purchase a  long-term care insurance policy will use their coverage by the age of 60. It’s important to understand the costs, start by estimating the cost of care in your area to understand how much you might need to cover. It’s good to look at the cost of care for the present-day and in the future. Start shopping around for plans in your mid-50s. This is a good time to shop for long-term care, but if you’re in good health, you can shop as late as age 60 to 65. 

The later you buy, the bigger your premiums could be, but you could spend less time paying them. A financial planner can advise you on the best time to purchase, given your circumstances. Some life insurance policies offer long-term care or a chronic illness rider that can cover costs by allowing you to receive some of your death benefits early. This is also something to discuss with your financial professional.

Establish An Emergency Reserve

When it comes to retirement security, as a woman, it’s crucial to build a safety net you can rely on during tough times. Most experts recommend having three to six months of living expenses saved to an interest-earning savings account, but a product like permanent life insurance can also provide a way to access cash when you need it. 

Over time, your premium payments help build the policy’s cash value, allowing you the possibility to borrow against the death benefit. This is only possible after you’ve owned the policy long enough to build cash value, so make sure you have an adequate cash emergency fund in the meantime. 

Final Thoughts

Generally speaking, women face a variety of different challenges when it comes to building a secure retirement. With enough planning and preparation, those challenges don’t have to be roadblocks. 

If you want professional guidance to help you make your best retirement plan or choose products that will strengthen your investment mix, contact us today. We’ll work with you to understand your goals and priorities and develop a strategy to help you achieve your best result.


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