In the last enewsletter, we discussed why women tend to retire with fewer assets than their male counterparts, and the importance of women planning for brighter futures. This month, we’ll take a look at how to create a plan to play catch-up – to save more now for that time when you’ll really need that nest egg.
Playing Catch Up
If you’re just getting by each month, living from paycheck to paycheck, it can be difficult to start saving more for the future. Start by keeping a record of all your spending for 30 days. If you buy it, you record it. At the end of the month, you’ll have a complete picture of where the money goes, and where you might be able to cut back on unnecessary expenses.
If you buy a large latte on the way to work each day – at $4 daily – that’s $20 a week, or $80 a month! Bring your morning coffee from home, and set aside an extra $80 a month for a more secure retirement.
Review your spending, isolate unnecessary expenses, eliminate those expenses (fewer restaurant take-outs, for example), and start saving more each month to help close the gap between your retirement savings and your retirement needs.
Next, reduce your debt load. If a big percentage of your salary goes to servicing credit card debt, you have too much credit card debt. Pay down what you owe as soon as possible, and start investing that monthly interest expense into a better future for yourself.
Waiting Out Social Security
The longer you wait to start collecting Social Security, the more you’ll receive each month. Collecting at 70 versus 62 may mean the difference between a comfortable retirement and a retirement filled with money worries. If you haven’t already done so, create an account with the Social Security Administration at www.ssa.gov. There, you can see your projected retirement payments, and how waiting to retire will affect them.
Save For the Future with the Help of Your Spouse
If your husband will receive a traditional pension, some businesses and municipalities offer employees the option of a wife receiving the husband’s full pension amount even if the husband is deceased. More money is deducted from each paycheck when employees choose this option, but it can provide a level of security for the surviving spouse. That monthly pension check may cover a lot of expenses.
If your husband’s employer offers a 401(k) savings plan, make sure your family makes the maximum contribution you can comfortably afford. Make sure you – the wife – are the designated beneficiary of that 401(k). Ask your husband to check with his employer’s human resources department to make sure all pension and savings plan information is up to date, and is designed for your benefit in retirement.
If you’re a stay-at-home mom, open an individual retirement account (IRA) and make sure your household funds that retirement vehicle to the maximum amount currently allowed. You may have to skimp here and there, but IRA assets grow tax-free, and can help you prepare for a better retirement.
If you’re divorced, contact the Social Security Administration. Depending on your age, your ex’s age, how long you were married, and other considerations, you may be entitled to a portion of your ex-husband’s Social Security pay-out each month.
Other Ways to Catch Up
Start early. Retirement may seem a long way off, but the sooner you start saving for those retirement years, the longer your money works for you. Don’t put this off, even if it means cutting back a little.
Purchase a term life insurance policy on the main breadwinner. If your spouse passes away during his peak earning years, you may fall further behind in your retirement savings efforts. Think of it as a safety net if the unthinkable happens.
Talk to a financial advisor, and your insurance agent, about opportunities to protect yourself as you enter your Golden Years. Preparing now is preparing for the future.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.
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