HAVING A PLAN
Planning strategies recommended for single women nearing retirement.
Dear Savvy Senior: What retirement planning tips can you recommend to single women? I’m 54 and divorced with a teenage daughter and very little saved for retirement.
— Financially Behind
Dear Behind: It’s an unfortunate reality, but most single women— whether they’re divorced, widowed or never married— face much greater financial challenges in retirement than men. Why?
Because women earn less money— about 80 cents for every dollar that men make, on average, and they have shorter working careers than men due to raising children and/or caring for aging parents. And less money earned usually translates into less money saved and a lower Social Security benefit when you retire.
In addition, women live an average of five years longer than men, which requires their retirement income to stretch farther for living expenses and health care costs. And, according to some studies, women tend to be less knowledgeable and more intimidated about financial issues than men, which means they don’t always handle their money as well as they should.
Because of these issues, it’s very important that women educate themselves on financial matters and learn how to save more effectively. Listed below are some tips and resources that may help you.
Start saving
If your employer offers a retirement plan, such as a 401(k), you should contribute enough to at least capitalize on a company match, if available. And if you can swing it, contribute even more. By law, you can save as much as $18,500 in a 401(k) in 2018, or $24,500 to those 50 and older ,because ofthe catchup rule.
If you don’t have a workplace plan, consider opening a Traditional or Roth IRA. Both are powerful tax-advantaged retirement savings accounts that let you contribute up to $5,500 annually, or $6,500 when you’re over 50. And if you’re self-employed, consider a SEP-IRA, SIMPLE-IRA and/or a solo 401(k), all of which can help reduce your taxable income while putting money away for retirement.
Also, if you have a highdeductible health insurance policy, you should consider opening a health savings account. This is an excellent tool that can be used to sock away funds pretax and use them before or after retirement to pay for medical expenses.
Find your number
It’s also important to get a handle on how much you need to save for a comfortable retirement. You can do this through a number of free online calculators like ChooseToSave.org or FinancialMentor.com/calculator.
Pay off debt
If you have debt, you need to get it under control. If you need some help with this, consider a nonprofit creditcounseling agency that provides free or low cost advice and solutions, and can help you set up a debt management plan.