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Retirement Planning

Retirement Planning

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Published by iyer_anusha81

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Published by: iyer_anusha81 on Nov 07, 2011
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11/07/2011

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• Women spend less time in theworkforce– Women are far morelikely than men to take time fromtheir careers to tend to familyresponsibilities, which translates tolower overall career earnings toinvest.• Women are less likely to haveretirement plans– Because somany women work in part-time jobs or for employers that don’toffer retirement benefits, fewerhave defined benefit pensionplans. And those with plans havesmaller pensions because of lesstime in the workforce. Womenmay also be less likely toparticipate in retirement plansbecause of lower compensation.• Women have lower Social Securitybenefits– Lower income and lesstime in the workforce also meanslower Social Security incomewhich is a potentially significantblow to their retirement income.• Women live longer– A longerlifespan means women not onlyneed to save more for retirement,but also should consider theimpact of the health care costsassociated with the spouse whodies first.a greater possibility of outliving theirretirement savings. Plus, a numberof factors put women at a distinctdisadvantage when it comes toaccumulating enough money fortheir retirement.Such obstacles mean retirementplanning for women often takes adifferent path than that of men. Thebottom line is that women need totake control of their financial futureby saving more for retirement.
Female’s financial obstaclecourse
Among the many real financialobstacles facing women on theirroad to retirement are:• Women earn less– On average,women earn about 77 cents forevery dollar men earn, whichmeans they have less money toinvest during their careers.
1
Women tend to live up to sixyears longer than men, onaverage. Scientists – as well ascomedians! – have manyexplanations for the disparity.For women, though, longevitymeans more than scoring pointsin the battle of the sexes. Itmeans they need to be morefinancially prepared forretirement, while overcomingnumerous financial obstacles.A different road to retirement
With a longer life expectancy thanmen, women will most likely havemore time to enjoy their retirement.But, while living longer is clearly apositive, it also means women have
This information is provided for youreducation only by ING Financial Advisers,LLC (member SIPC).
1 Families Can’t Afford the Gender Wage Gap; April 20,2010. Center for American Progress.This information is provided for your education only by the ING family of companies.
INGSpecial Report
Retirement Planningfor Women
Living longer means saving more
 
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
$50,000 $50,000
% of salary
5%8%
deferred per monthAmount of salary
$208.33 $333.33
deferred per monthTime period
15 years15 years
Total Contributions
$37,499.40$59,999.40
Total savings
$59,773 $95,637
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.
 
With a longerlife expectancythan men, womenwill most likely havemore time to enjoytheir retirement.

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