Currency Corner: Single, Female and Preparing for Retirement
By Lorri Gifford
This month I’m going to talk about a topic near and dear to my own heart: Preparing for retirement as a single woman. To help me with this topic I had the honor of talking with Gloria Berlin, an exclusive agent with Allstate.
After talking with Gloria, reading some literature she shared with me and doing some additional research, I found out some surprising facts about women and retirement. Did you know that women have a longer life expectancy than men? (About 5 more years) A longer life means that more money will be needed to live it. Especially for health care and other daily living expenses. Because of the higher life expectancy, most women end up managing finances alone. Women are also more likely to end up in a nursing home. There are currently about three times the number of women in nursing homes as men.
Even as far as we have come today, women still earn less than men. (Sad but true.) And according to the U.S. census bureau, women over 75 are nearly twice as likely to live in poverty as men of the same age. It stands to reason then that the least we can start to do as women, single or married, is educate ourselves on finances and retirement.
Knowing that Forewarned is forearmed. Abraham Tucker
For a single woman, the first question on the path to monetary enlightenment and retirement to ask yourself is: How much longer do I want to work? Close your eyes for a moment and take a few deep breaths and think of where you are in your career life right now. Then imagine how much longer you can see yourself doing this work.
Let’s say that you, like me, are 45 and plan on retiring at 65. In this case, you will have 20 years until you plan on retiring. This means that you will have 20 years to amass a certain amount of money to live the way that you want to live.
Now you need to consider the 3 Key Questions:
In 20 years will there be Social Security benefits?
What amount do I consider enough money to live on each month?
Are you a good saver or not?
One of the tips Gloria gave to me was to plan for the amount that I wanted to have monthly after I retired and treat my social security as an added benefit rather than planning on receiving it. Maybe you want to have $3000 per month to live on. A good Financial Advisor or Agent can help you factor in the inflation rate and figure out how much you would have to make between now and then to be able to accomplish this. Because lifestyles vary as well as bank accounts, as a single woman you want to get the most bang for your buck.
Planning for retirement for any person is basically the same. The main difference in planning as a single woman is that most women are scared of finances. Gloria Berlin, Exclusive Allstate Agent
Now it’s time to get really honest with yourself. Are you a good saver or not? The beauty to this answer is that you can change it to yes at any moment. Knowing how long you have until you retire and the amount that you want to live on breaks it down into black and white figures. When you look at a black and white figure you can take the emotion out of it and come up with an action plan.
Before we look at the type of savings preparation, if any, that you have, let’s get clear on what your current priorities are.
Above all, be the heroine of your life, not the victim. Nora Ephron
Now that you are aware of your priorities let’s look at your current savings. What kind of savings have you done for retirement? Do you have a Traditional IRA? Roth IRA? 401K/Stock Dividends? Life Insurance? Remember it is never too late to start.
Here is some basic information about the three types of retirement savings that I mentioned above. If you are interested in learning more about Life Insurance check out last month’s Currency Corner article for more detailed information.
Being single used to mean that nobody wanted you. Now it means you’re pretty sexy and you’re taking your time deciding how you want your life to be and who you want to spend it with. Sex and the City
This month’s topic gave me a lot to reflect upon. In the process I came to the conclusion that I wanted to commit to contributing to my John Hancock plan on a monthly basis. After all I have 20 years to save so I’d better get crackin’.
A traditional individual retirement account is used to save pre-tax dollars for use in retirement. You can open an IRA at your local bank/credit union, a mutual fund company with your Financial Advisor or a brokerage. The money in the account can generally be invested in stocks, bonds, mutual funds, or CDs, subject to the availability of products within your account. In most cases, the primary benefit of a traditional IRA is that when you deposit money into the account, you can deduct that amount from your taxable income and this results in paying less income tax for the year. In addition to receiving the tax deduction up front, the money in the account grows tax-deferred until money is withdrawn and then the money is taxed as ordinary income.
The principal difference of the Roth IRA is that, rather than granting a tax break for money placed into the plan, the tax break is granted on the money withdrawn from the plan during retirement.
401 K’s / Stock Dividends:
A 401k plan is a retirement plan sponsored by employers. Employees may choose to have a portion of their salary deferred to any of the 401k investment choices selected by the employer. The contributions are deducted from pretax pay and employers frequently add annual matching contributions up to a set limit.
If you have any questions about investments, investment opportunities or saving for your retirement, give Gloria Berlin (828-298-2483) or your own Financial Advisor a call. Good luck on your new road to retirement!
What’s Your Priority?
Below are various planning goals, objectives and roadblocks to financial security and success. Please take a moment to review and number them in order of their immediate importance to you. (1= most important)
_____ Establishing and sticking to a monthly budget.
_____ Reducing wasteful spending
_____ Protecting my family from losing their standard of living.
_____ Saving my first $1,000
_____ Establishing an emergency fund of 3-6 months living expenses.
_____ Paying off consumer debt.
_____ Getting my family (and me) to stop using/abusing credit.
_____ Saving to buy a home.
_____ Paying off my mortgage.
_____ Establishing/boosting college savings plan for my child(ren).
_____ Establishing/boosting retirement savings plan.
_____ Protecting our savings from loss due to health issues and/or taxes.
_____ Increasing my retirement income.
_____ Lowering taxes on my Social Security.
Lorri Gifford has been reading Tarot Cards since 1986. While living in California, she worked at The Chopra Center for Well-being as their Spa Director and a Lead Educator. Lorri enjoys writing, giving readings, coaching and helping others develop and deepen their intuition. She can be reached at www.readingswithlorri.com or 828.505.4485.