A key goal of investing for retirement is making sure you save enough to make your money last throughout your lifetime. On this score, women may need to save more than men. The current life expectancy of a female at birth is roughly 81 years, compared with 76 years for a male.
Although five years may not appear significant, many people in this age group incur expenses for health care and other items while living off of Social Security and personal assets.
Keep in mind that life expectancy statistics are averages and many people live much longer. It is not unusual for an individual’s retirement to last 20 or 30 years or more. There is also the issue of the length of a person’s career and how much time an individual has to build retirement assets. Many women take time off for caregiving responsibilities, and during these years they may not add to their retirement portfolio.
In addition, time off from work may affect Social Security benefits because those who are not working do not earn credits that are used to determine retirement benefits. Also, parents, children, and other loved ones often have financial needs, and both women and men may provide help for family members, which may divert funds from retirement savings.
Of course, every woman’s life is unique and many women capitalize on the benefits available to them, including participating in an employer-sponsored retirement plan or funding an IRA, to build the assets needed for their later years. It’s important not to underestimate how much you may need or the importance of ongoing contributions to retirement accounts to build assets over time. Although there are no guarantees, the longer you stay invested, the more likely that your contributions may benefit from compounding, when investment gains are reinvested and potentially earn even more over time.
Your financial advisor can help you calculate how much you are likely to need for your later years. Be sure to consider how you will pay for health care expenses not covered by Medicare or other medical insurance. When considering sources of retirement income, log on to www.ssa.gov or review your annual statement to estimate your retirement benefit from Social Security.
If you find that your retirement assets are coming up short, delaying retirement or saving more while you continue to work may be helpful strategies.
A little more about us:
Compass Financial is an independent, fee-based financial advisory firm in West Des Moines, Iowa. The Compass Team helps individuals and families develop an inspiring vision of their financial future and a realistic strategy.
By listening closely to our clients’ true needs, wants, hopes, desires and dreams we are able to combine Wealth Management and broad Financial Planning customized to each individual situation. It’s our goal to assist you in developing a personalized financial road map. The results from the process should include confidence that comes from planning. As we all know, life happens, sometimes ambushing the best laid plans. Accepting a new reality and adapting the financial plan is work we have done many times for our clients.
We also offer Financial Check Up or Second Opinion Services to those who want to enhance the service they are already receiving. This should lead to a better understanding of your current plans and give added confidence to your existing advisor relationship.
Sometimes life’s biggest challenges come in the form of transitions, retirement, marriage, health issues, divorce, unexpected loss, or even college savings. Our team at Compass has experienced many of these life transitions, it’s our hope to come alongside you and your family. These defining moments of life provide opportunities to implement financial strategies that can have long lasting impact. The first step is always the most difficult, but can also be the most rewarding. Please Contact Us today to receive your free, no obligation, one hour initial consultation!