4 Financial Tips for Women

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Women are outperforming men in the job market recovery. Overall employment among women is at an all-time high, according to the Department of Labor, as female workers have recovered all the jobs lost during the recession and then some, as of September 2012.

But even as women prove their resilience in the workforce, a majority still feel unprepared for their golden years. A Charles Schwab survey released this past April showed that less than 40 percent of women believe they’ll have enough for a comfortable retirement.

While women face a unique set of circumstances when it comes to retirement planning, being more aware of these challenges is the first step to helping to overcome them. So here are four situations with tips that will help women prepare and be confident in their financial future. Keep in mind, this information should not be considered personalized investment advice or recommendations. Because each situation varies, it’s important to review for your own particular situation.

  1. Women will have a lengthier retirement. Women tend to outlive men by an average of six year, according to the Administration of Aging. Though a longer retirement means more time to travel and spoil grandchildren, it also means women will have to save more money to last them through their longer lifespans. Tip: Stocks are an important part of most portfolios, even during retirement. Though you may want to gradually reduce your exposure as you get older, consider maintaining a portion of your savings in stock investments to counteract the impact of inflation.
  2. Women can have a more expensive retirement. Not only do women have to plan for more years in retirement, but they often have to anticipate higher expenses. Longer life expectancies can translate into increased medical expenses and a higher likelihood of entering a nursing home or assisted living community, or hiring formal home care. Tip: Medicare benefits cover some medical costs during retirement, but consider signing up for supplemental insurance, such as long-term-care insurance or a Medigap policy or a Medicare Advantage Plan.
  3. Women potentially have to save more to make up for earnings loss. On average, women still earn lower salaries than their male counterparts. Data released this past October by the Labor Department shows that full-time working women aged 55 and older earned just three-quarters of the income of men in the same age group in 2012. Tip: In case you procrastinate on saving, catch-up by maxing out your 401(k) contributions. And each year after you turn 50, contribute up to $5,500 beyond the usual limit to your 401(k). You may also be able to annually contribute an extra $1,000 to your Traditional or Roth IRA.
  4. Women may receive less in Social Security benefits. Lower salaries and fewer years in the workplace also put women at a disadvantage when it comes to Social Security benefits. In 2012, women earned about 20 percent less in Social Security than men, according to the Social Security Administration. Tip: If you choose to start cashing in your Social security checks before your normal retirement age, your benefits are reduced. If you wait to some point between your normal retirement age and the age of 70, you’ll receive a higher monthly benefit.
Laura_Catalano

About Laura Catalano

Laura Catalano is a Chicago-based branch manager with Charles Schwab & Co., Inc. She can be reached at laura.catalano@schwab.com.