Women should start planning for retirement sooner rather than later

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Women face special challenges when planning for retirement. Because their careers are often interrupted to care for children or elderly parents, women may spend less time in the workforce and earn less money than men in the same age group. As a result, their retirement plan balances, Social Security benefits and pension benefits are often lower. In addition to earning less, women generally live longer than men, and they may face having to stretch limited retirement savings and benefits over many ears.

 To meet these financial challenges, a woman will need to make retirement planning a priority. This column is aimed at the women in the audience.

Begin saving now

To help improve your chances of achieving a financially comfortable retirement, start with a realistic assessment of how much you’ll need to save. If the figure is substantial, don’t be discouraged – the most important thing is to begin saving now. Although it’s never too late to save for retirement, the sooner you start, the more time your investments have to grow.

The chart shows how just $2,000 invested annually at a 6 percent rate of return might grow over time. Note that this is a hypothetical example, and does not reflect the performance of any specific investment. Results assume reinvestment of all earnings and no tax.

Save as much as you can – you have many options

If your employer offers a retirement savings plan, such as a 401(k) or a 403(b), join it as soon as possible and contribute as much as you can. It’s easy to save because your contributions are deducted directly from your pay, and some employers will even match a portion of what you contribute. If your employer offers a pension plan, find out how many years you’ll need to work for the company before you’re vested in, or own, your pension benefits.   by leaving their jobs before they become vested in their pension benefits. Keep in mind, too, that because your pension benefits will be based on your earnings and on your years of service, the longer you stay with one employer, the higher your pension is likely to be.

Most employer-sponsored plans allow you to choose from several investment options (typically mutual funds). If you have many years to invest or you’re trying to make up for lost time, you may want to consider growth-oriented investments such as stocks and stock funds. Historically, stocks have outperformed bonds and short-term instruments over the long term, although past performance is no guarantee of future results. However, along with potentially higher returns, stocks carry more risk than less volatile investments. A good way to get detailed information about a mutual fund you’re considering is to read the fund’s prospectus, which can be obtained from the fund company. It includes information about the fund’s objectives, expenses, risks and past returns. A financial professional can also help you evaluate your retirement plan options.

Save for retirement –                    no matter what

Even if you’re staying at home to raise your family, you can – and should – continue to save for retirement. If you’re married and file your income taxes jointly, and otherwise qualify, you may open and contribute to a traditional or Roth IRA as long as your spouse has enough earned income to cover the contributions. Both types of IRAs allow you to make contributions of up to $5,500 in 2015 (unchanged from 2014), or, if less, 100 percent of taxable compensation. If you’re age 50 or older, you’re allowed to contribute even more – up to $6,500 in 2015 (unchanged from 2014).

Plan for income in retirement

Do you worry about outliving your retirement income? Unfortunately, that’s a realistic concern for many women. At age 65, women can expect to live, on average, an additional 20.5 years. In addition, many women will live into their 90s. This means that women should generally plan for a long retirement that will last at least 20 to 30 years. Women should also consider the possibility of spending some of those years alone. According to recent statistics, 36 percent of older women are widowed, 14 percent are divorced and almost half of all women age 75 and older live alone. For married women, the loss of a spouse can mean a significant decrease in retirement income from Social Security or pensions.

So what can you do to help ensure you’ll have enough income to last throughout retirement? Here are some tips:

Estimate how much income you’ll need.

Use your current expenses as a starting point, but note that your expenses may change by the time you retire.

Find out how much you can expect to receive from Social Security, pension plans and other sources. What benefits will you receive should you become widowed or divorced?

Set a retirement savings goal that you can work toward and keep track of your progress.

Save regularly, save as much as you can and then look for ways to save more – dedicate a portion of every raise, bonus, cash gift or tax refund to your retirement savings.

Consider how you can help protect yourself and your family from potentially substantial long-term care expenses. By planning ahead, you could help preserve your choices for care and may avoid becoming a burden on your family.

BARBARA KENERSON is First Vice President/Investments at Janney Montgomery Scott LLC and can be reached at BarbaraKenerson.com