Women have many things to think about when it comes to planning for retirement.
For starters, women have a longer life expectancy than men—particularly in more developed corners of the world. One study found that women born in the United States have an average life expectancy of 80.5 years, whereas men live for an average of 75.1 years.
In other words, women tend to live longer than men, so they need more money to live comfortably in retirement.
That being the case, women need to start planning for retirement as soon as possible to ensure that they can enjoy their golden years and live life to the fullest.
By educating yourself on retirement and associated life events, you can make smart financial moves and enjoy a more secure future during retirement.
Retirement Planning for Women: What You Need to Know
Although women can be very successful in gaining wealth, their path to success is often different from their male counterparts because women often make less than men throughout their careers
With that in mind, let’s examine some topics that women need to think a bit differently about when planning for retirement.
1. Be Aware of Your Options
There’s no shortage of considerations when it comes to retirement planning for women.
From brokerage accounts to 401ks and individual retirement accounts (IRAs), there are many ways to think about your investments through the lens of retirement planning. You will need to consider short-term and long-term capital gains, portfolio diversification, and required minimum distributions once you’re 72. Do you own real estate? Fine art? Luxurious vehicles? You will need a strategy to manage those too.
How much cash do you need on hand? As a good rule of thumb, you should have an emergency fund that allows you to absorb at least six months' worth of living costs to cover unplanned expenses. To increase your returns, you may want to look into parking your funds in a high-yield savings account.
Because many retirement accounts are tax-deferred, you will need to figure out the impact withdrawals will have on your tax obligations. If you’re anticipating earning little income one year, you may want to think about doing a Roth conversion where you pay taxes on what’s in your retirement account and are allowed to withdraw funds tax-free from there on out.
Insurance and Healthcare
Your insurance and healthcare needs change as you get older. More likely than not, you will spend more on healthcare during retirement than you did when you were working. In addition to thinking about Medicare and whether you want additional coverage, you should also look into health savings accounts (HSAs), which are tax-advantaged accounts that enable you to put money aside for healthcare expenses.
Social Security payments can help you cover some living expenses during retirement. But it’s unlikely that you can live off of these funds alone. As you approach retirement, you need to think about when you will start collecting Social Security. You can opt to start collecting at 62, which would lower your benefits. Or, you can wait until you’re 70, which will increase your benefits. The choice is yours—and for many, it’s not an easy one.
Are you planning to leave a legacy to your children, loved ones, and favorite charitable causes? If so, you may want to look into trusts to protect your wealth and ensure it ends up exactly where you want it to be.
With so many moving parts to juggle, you will need to put together a tax strategy that enables you to keep more of what you have worked so hard to earn. Of course, the tax code isn’t exactly the easiest thing to understand. This is an area where working with a professional financial advisor can make all the difference.
2. Tap Into the Community
No rule says you need to approach retirement planning entirely on your own.
After you have learned the ins and outs of the different components of retirement planning—or have at least familiarized yourself with some of them—it’s time to do some research to see what options are available to you in your community.
If you’re a single woman, you can utilize a number of community resources. For example, you might look into communal living. Your local community center may also offer classes designed to help women like you sharpen their financial skills and learn how to live more frugally and invest more effectively.
As you begin thinking about retirement planning, it’s important to remember that you will likely need to move out of your home and take part in long-term care. That could mean moving into an in-law apartment within your adult child’s house, getting a roommate your age, or becoming a resident at a senior living community. Whatever you decide, the sooner you start thinking about these things, the faster you will be in a position to retire comfortably.
3. Talk to a Financial Advisor
Because this is your first time planning for retirement, you will have plenty of questions. If you go it alone, there’s a good chance you might overlook some critical aspects of retirement—like Medicare and how your insurance changes over time.
That’s why it’s so important to see if you can partner with a financial advisor who suits your needs and can help you build a retirement plan that works for you. The right financial advisor will have helped countless individuals like you prepare for retirement and enjoy their golden years in comfort.
If you’re looking to join forces with a financial advisor, EP Wealth Advisors can help. Not only do we regularly publish content aimed at helping women improve their financial well-being, but we’re also a fiduciary firm committed to acting in your best interest.
It’s Time to Take Control Over Your Retirement!
If retirement planning were easy, everyone would be able to live comfortably during their golden years. But according to a recent survey, nearly two-thirds of Americans don’t think they are on the right track in their retirement planning.
No matter where you are in your retirement planning, you can always improve your stance. You just need to take a proactive approach and engage with professionals who have helped countless folks just like you get ready to call it a career.
At EP Wealth Advisors, we’re dedicated to offering specific resources for women that can help you supercharge your financial well-being and prepare for retirement. Take a look at our initiatives and see if anything looks appealing. We would love for you to join our community.
In the meantime, if you’re looking to learn more about how women can improve their financial standing, watch our free on-demand webinar, “Building Wealth for Women of All Ages.”
Here’s to making the most out of retirement!
EP Wealth Advisors, LLC ("EPWA") makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented in this report. EPWA has used its best efforts to verify the data included. The information presented was obtained from sources deemed to be reliable and deemed to be accurate as of the date of delivery. However, EPWA cannot guarantee the accuracy or completeness of the information offered. The content of this report is subject to change often and without notice.
All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions, may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio.