The difference between men and women and their retirement plans aren’t as similar as some might think. It’s about far more than ensuring the retirement account hits a magic number.
The most obvious difference is that women live longer than their male counterparts; in fact, the difference can be five years or more. While many will have the benefit of their husband’s retirement benefits, that’s not always the case.
The tides are shifting to some degree, but for those retiring in the next decade or so, women are generally the ones who left the workforce at some point to raise children. Their concerns in their 20s and 30s weren’t likely on covering retirement; their husbands worked, so what protected him also protected her. On average, women leave the workforce for 11 years and often return after the children are older. Unfortunately, for those who did return to the workforce, not only did they earn less than men, but they lost any momentum in their own forward movement, which meant they started low on the financial totem pole. Those gaps are beginning to close, but it’s a slow dance with the nation’s lawmakers leading.
So what do we tell our clients who are women?
If you can begin a retirement plan, such as a 401 (k), you should make that a priority. And it’s never too late. You’ll be able to save an impressive amount and for every dollar you put into your retirement account is a dollar you don’t have to pay taxes at the time. Also, employers are beginning to ease their tightened belts and many are once again matching employee contributions. Think free money – because that’s exactly what it is. Pay attention, though – there may be a minimum you must contribute to your retirement plan in order for your employer to match it, so don’t let a few dollars prevent you from basically doubling your savings.
Don’t underestimate the power of your estate plan. Put into place various trusts that will ensure your children or grandchildren are remembered after your death. You can actually take steps that will ease their tax burdens, as well. Don’t forget your powers of attorney and health care directives, too. This is important as you want to ensure your wishes are always met while also easing the burden on your loved ones.
Did you know that even if you don’t work outside the home, you can still set up a retirement account? It’s called a spousal individual retirement account and it’s designed to allow you to contribute, even minus earned income, in order to better prepare for your future. This is especially beneficial if you’re concerned your husband’s retirement accounts won’t be able to meet the financial needs.
Finally, don’t underestimate the many benefits that come with speaking with an estate planning attorney. Choose one who understands the needs of women, regardless of their marital status, employment status and other financial realities. The couple of hours you spend today putting those proverbial ducks in a row can make all the difference in how relaxed you are sitting in your rocking chair, on your front porch, as the summer months ease in.
Londonderry Retirement Planning Consultation
Give us a call today to discuss all of the dynamics and options that women face. Our Londonderry retirement planning attorneys are here to help and the peace of mind you’ll gain is truly priceless.
Daniel DeBruyckere
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