Women still face unique challenges when it comes to saving for a more secure retirement. Despite huge steps forward with regard to education and career opportunities, women are still more likely than men to be a single parent. Far more often than men, they take time off from their career to raise children. Typically, they live longer than men. These factors combined mean it’s extremely important for the mothers, grandmothers and daughters in our lives to have a solid plan for their financial future. This Mother’s Day, we want to make sure that the women in our lives are prepared for tomorrow. Here are some useful tips on how to plan for your retirement.
A recent study by the Transamerica Center for Retirement Studies offers several timely tips:
1. The write stuff. The first step is to write down what you envision for your future retirement. Without a good idea of how you would like to live, it will be difficult to know how much you’ll need to save.
2. Add up retirement needs. Calculate your retirement savings needs and how much you will need to save each year in order to achieve that goal. Be sure to include employer-sponsored retirement plans and outside savings, and to factor in living expenses, healthcare needs, long-term care costs and any government benefits you anticipate receiving.
3. Ask important questions. If your employer doesn’t offer a retirement plan, ask for one. Having the opportunity to participate in a pre-tax savings plan such as a 401(k) can make a huge difference in the amount you can save. It’s a great way to plan for your retirement because you can arrange to have a certain amount automatically withdrawn from your paycheck each month – and put directly toward your 401(k).
4. Take advantage of opportunities. If your employer offers a retirement plan, consider doing whatever it takes to participate. If your employer offers a matching contribution, consider making sure that your annual salary deferral takes full advantage of the option. Think of it this way: If your employer is willing to put 4% into your account if you put in 4%, be sure to contribute a minimum of 4%. If it’s 5%, contribute at least 5%, etc. Why pass up free money?
5. Have a back-up plan. What would happen if you weren’t able to work anymore? You don’t want to be in that position, but it’s better to be prepared than caught off-guard. So, identify potential cost-cutting lifestyle changes such as moving to a smaller home, taking on a roommate or two and buying disability insurance, life insurance, or other insurance safeguards.
By having a plan in place for your retirement, you can enjoy the present without worrying about what lies ahead. And a sound financial future may be the greatest Mother’s Day gift of all.