It’s no secret that women face a certain set of challenges when it comes to their financial situations, especially owing to the fact that females are still significantly underpaid compared to their male counterparts. Another common obstacle is due to the fact that many married women rely on their husbands to manage the money, and when and if the time comes that they need to take care of it on their own, they are left feeling overwhelmed and underprepared. This is exactly why, however, women should be more proactive when it comes to their finances. Consider these ways for women to improve their financial security as they move through life.
- Plan for a longer retirement. It’s important for women planning for retirement to understand that they are likely going to live longer than their male spouses. Therefore, they will need more money to fund longer retirements, (which is a bit of a Catch 22 when you take into account the fact that women make less money than men do). The advice here is to accept the fact that you will need more money to retire, rather than to brush that fact under the rug. Once you do so, you can start taking the steps you need to take to get ahead.
- Understand the investment options available to you. If you are fortunate to be offered a 401(k) through your employer, then you should certainly be taking advantage of it. But you should also consider other types of accounts, such as traditional and Roth IRAs, which have varying contribution limits and tax rules. If you are self-employed, consider a solo 401(k) or a SEP IRA, both of which are types of accounts that can expand your investment opportunities.
- Ramp up your regular retirement savings. If you can, try to max out your contributions to your retirement accounts on an annual basis. If you are younger than 50, the max is $18,500 annually for 401(k)s and $6,500 annually for IRAs. Of course, maxing out your contributions at these numbers is easier said than done. However, strive to increase your savings amounts gradually each year, and it will make a difference over time.
- Educate yourself about health care costs. It is estimated that the average woman will spend $194,000 more than the typical male on healthcare in retirement alone. This is due simply to the fact that women live longer on average than men, and therefore they will need additional healthcare to cover them during their later years. One way for women to improve their financial security is to prepare for these long-term health care costs via securing long-term care insurance. Obtaining long-term care insurance at a younger age can increase the chances that you are approved and can potentially qualify you for a discount on your premiums as well.
- Assess your level of risk tolerance. Understand what level of risk you are comfortable with as an investor. When you are younger, if you put your money in high-risk investments and you suffer a significant loss, you have time to make up for that loss. When you are pushing retirement, a devastating loss from a high-risk investment can be far more devastating, simply because you do not have the time to make up for it. Consider adjusting your level of risk as you grow older. As per the rule of 100, you should have at least the percentage of your money equal to your age in risk-protected investments. Low-risk does not have to mean low gains, however. There are investment vehicles you can use in which your money is 100 percent protected from loss while earning reasonable rates of return at the same time.
- Find a financial advisor you trust. There’s no shame in consulting an expert, especially when it comes to something as complex as your finances. A trustworthy advisor should be open with you about your risk tolerance and any obstacles that are standing in between you and your long-term financial goals. Finding the right person to help you organize your finances can help put your mind at ease regarding your financial security.
Use these suggestions for women to improve their financial security as guidelines for a more stable financial future. If you want your money in risk-protected investments, but you still want to enjoy stock market gains, the Ty J. Young Inc. team can help. Call us today at 877-912-1919, and continue to follow Ty J. Young Inc.’s Retirement You Earned blog!