Think about your future
Despite the potential shortcomingsin retirement, women often put offtheir retirement planning. The truthis, you’ll most likely need to fend foryourself at some point in retirement– and the longer you put offplanning, the greater the chanceyou won’t have enough savings.The best place to start is to envisionwhere you’d like to be. Think abouthow you want to spend each day,where you want to live, how oftenyou want to travel. A clear vision ofhow you want to spend yourretirement will help motivate you totake the necessary steps to reachthose goals.
Take stock of where you are
One of the first steps to meet yourretirement goals is to take stock ofwhere you are financially, thenassess how you might be able tospend less so you can save more.Ask yourself the following:• How much do you spend eachmonth?• How much debt have youaccumulated?• Do you have an emergency fundto cover three to six months?• How much have you saved?• How much more could you save ifyou spent a little less?Once you’ve established how much– if any – money you can free up,you can then determine the bestplace to put that money. Keep inmind that a few small sacrifices nowcan add up to a lot more later.
Preparing for your future
A few other tips to consider whenplanning for your future:
Make retirement plans apriority –
When searching fora new job, consider sacrificingsome current salary for a goodretirement plan. Also consideremployers that will match partor all of your plan contributions.
Talk to your spouse –
Simplytalking to your spouse can helpget your retirement planning ontrack. It’s important to have aconversation about what yourretirement needs will be andhow much it will cost you eachmonth.
Understand the effects ofdivorce –
If you divorce, knowhow it impacts your retirementplanning. For example, if youwere married for at least 10years, you are entitled to SocialSecurity payments equal to 50%of your ex-husband’s benefits(although you lose that right ifyou remarry). And any share ofyour ex-husband’spension or401(k) plan must be negotiatedas part of the divorce settlement.
Make smart investmentdecisions –
Educate yourselfabout the different investmentvehicles to help reach yourretirement goals and carefullyconsider how much risk youare willing to take to potentiallyearn higher returns.
Put your money to work
Most companies offer tax deferredretirement investment plans, such as401(k), 403(b) or 457 plans – all ofwhich are excellent vehicles to investfor your future. Be sure to not onlyparticipate in your employer’s plan,but to contribute as much as youcan afford. The power of tax-deferred compounding can reallyadd up.As the following chart shows, evenwith a 6% rate of return over 15years, deferring 3% more of yoursalary can increase your savingssignificantly:
Both Sondra and Donna earn 50,000per year, but Donna decides to save$125 more per month.SondraDonnaAnnual Salary
% of salary
deferred per monthAmount of salary
deferred per monthTime period
15 years15 years
Donna saves nearly $36,000more than Sondra!
The example above is hypothetical, for illustrativepurposes only and not intended to project theperformance of any specific investment. Actual rates ofreturn will vary over time. Dollar cost averaging/Systematic Investment plan does not ensure a profitnor guarantee against loss. Investors should considertheir financial ability to continue their purchasesthrough periods of low price levels.