Women and Retirement: 6 Crucial Strategies You Need to Know header image

Women and Retirement: 6 Crucial Strategies You Need to Know

There might not be any women-only 401(k) plans, but retirement planning for women is unique in its challenges.

Women have longer life expectancies than men, which means they spend more time in retirement and need greater savings to provide for themselves. Women also tend to make less than men and spend more time out of the workforce, which decreases their career earnings.

The 2017 Confidence Pulse Poll™ conducted by Farm Bureau Financial Services found that women are less confident about having enough money to live comfortably in retirement.

But it is possible for women to thrive in retirement. These six crucial strategies can boost your retirement savings and your confidence:

1. Start early.

The sooner you start saving, the better. Consider these numbers at a 4 percent rate of return:

  • Invest $2,000 annually starting at age 20 and watch it grow to more than $242,000 for retirement at age 65.
  • Wait until age 30 and that same $2,000 per year will leave you $147,000 for retirement.
  • Put off saving until age 40 and you’ll only have $83,000.

Start saving as soon as possible. Remember, saving a little every month is better than saving nothing at all.

2. Prioritize retirement.

Your kids will probably head to college before you retire, which might be the reason a T. Rowe Price report found that 67 percent of parents prioritized saving for their children’s college education over saving for retirement. In the survey, just 37 percent of women ranked retirement savings as more important than college savings.

It’s possible to get loans for college but not for retirement, which makes it even more important to focus on funding a 401(k) or IRA over a college savings account.

3. Take advantage of company matches.

An employer match is benefits lingo for “free money” and you should take advantage of it. If your employer offers a retirement savings plan with a company match, contribute at least the minimum to earn the company match — then watch as those additional funds add up over time.

4. Open a spousal IRA.

Not working? You should still have a retirement account. As long as your spouse has income and you file a joint return, the IRS allows you to contribute to an IRA or Roth IRA in your name. The contribution limit is $5,500 per year ($6,500 if you’re over 50).

5. Go for growth.

More than 70 percent of affluent women chose conservative investment strategies, according to a report by the Boston Consulting Group. No one is suggesting taking your retirement savings to Vegas and betting on black, but being too conservative with your investments could keep your retirement savings from keeping up with inflation, leaving you short when you’re ready to stop working.

Talk to an advisor about your risk tolerance (based on your age and time until retirement) and make smart choices that emphasize growth.

6. Wait to collect Social Security.

Retirement age for women starts at 62. This is when you’re able to start collecting Social Security benefits, but waiting— and continuing to work or using income from retirement savings or other investments — will increase the amount of your benefits.

The latest data from the Social Security Administration shows that those who start collecting at age 62 receive an average monthly benefit of $1,104; waiting until 65 increases the benefit to $1,601 per month; at 70, the benefit goes up to $1,961 per month on average.

When it comes to retirement, women face unique challenges. Employing these strategies now can ensure that you can take care of yourself when you stop working. To learn more, connect with a Farm Bureau agent. 

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