What Women Need To Know About Preparing for Retirement

By Pamela J. Sams, CRPC
NABBW’s Retirement Planning for Women Expert

As women, we have many different roles that we take on throughout our lives. We are daughters, wives, mothers, employees, housekeepers, volunteers and much more. With all of this activity, hustle and bustle, thinking about the day when we will retire always seems like it is a long way off. It can be difficult to put effort into saving for something that seems such a distant idea. However, planning and preparing for retirement is one of the most important things that we can do for ourselves.

The most important thing to remember when preparing for retirement is that your income will end, but your bills will not. There will be some decreases in spending, due to the fact that you will no longer need to commute and spend money on other work related expenses, but your cost of living will likely remain the same or even increase as you will be spending more time at home. You need to be sure that you have enough funding to take care of these expenses for many years to come.

Despite the economic downturn, saving for retirement is still extremely important. However, many people have decreased the amount that they are saving toward retirement. Women, especially feel affected by recent economic events, and are less certain about their investing and retirement. In fact, in the last 12 months, women were less likely than men to have made changes to their investment strategy. Often, women feel less confident about retirement investing and regret this fact.

So let\’s review several options available that allow you to save for retirement. Remember, each has its own set of rules and regulations. Be sure you understand the ins and outs of the types of retirement savings plans you are investigating before making a final decision.

Some of the most popular options for retirement funding include:

Social Security – In the US, Social Security makes up about 40 percent of your retirement income. While this free money is a wonderful asset to your retirement budget, it is far from enough to allow those who have left the workforce to live comfortably. You can budget Social Security payments into your retirement plan, but know that there is more that needs to be done.

Profit Sharing and Pension – Some employers offer profit sharing and pension plans to their employees. These are usually company allocated funds that are invested on behalf of the employee and are paid out upon your leaving the company. There are often penalties involved if you leave an employer before retirement. If your company offers one of these plans, be sure to educate yourself on the rules and regulations that govern the policy. Be sure to keep track of the amount that is in your account each year and review what your future additional needs might be.

401(k) Plans – 401(k) plans are very popular retirement savings plans that areoffered through employers. When these are offered through an employer, often employee contributions to the fund are matched by the company, up to a certain percentage of weekly or monthly income. In this case, you may want to elect to have a higher amount held from your checks to get the most from your money when it is time to cash out your account. As with a profit sharing or pension plan, usually you must have a certain number of years at a company for your account to be fully vested.

Individual Retirement Accounts (IRA\’s) – If you are not able to start a retirement funding plan through your employer or the plans that are offered to you are simply not enough for you to retire comfortably when you want to, consider anIRA. Certain types of retirement accounts offer tax incentives to those investing up to a certain amount of money each year. Remember that these are investment accounts, the amount they will be worth will vary depending on what you add to the account, where you invest these dollars and how long you keep the money invested.

Even when retirement is decades away, beginning to prepare for retirement as early as possible will make things less financially stressful for you down the road. Create an affordable retirement plan as soon as possible and you can be certain that your golden years are spent enjoying yourself, rather than worrying over how the bills are being paid each month.

Making the crucial decisions that are necessary to ensure that your future will be safe and comfortable can be difficult. You may want to seek the help of a financial advisor to review your retirement plan. They will be able to look at your current lifestyle and income, find out what you would like to accomplish in retirement and help you develop a retirement savings plan that will be affordable for you and will create a pleasant retirement environment for you later.

With careful planning and investment help, if necessary, you can ensure that you have a pleasant retirement without financial stress or worry.

Pamela has been helping women and their families improve their personal and financial wealth through good financial planning for the past 10 years. She is a Financial Advisor with Financial Planning Services of Northern Virginia and her office is located in Herndon, VA. She is an investment advisor representative and offers securities and advisory services through ING Financial Partners, Inc. Financial Planning Services is not a subsidiary of, nor controlled by, ING Financial Partners.