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Managing Your Home, Your Life and Your Future

Saving Today Can Save You Tomorrow

With the daily chaos of raising a family and running a home, often while juggling a career, many women forget that one day they too will have the opportunity to retire.   Sadly, not recognizing the need to plan ahead prevents many from a secure tomorrow.  More than 30 percent of women manage their household finances on some level, be it balancing a check book, paying household bills or developing a family budget, however many of these same women often fail to manage or take part in their own financial future.

On average, women live three years longer, earn 20 percent less and spend 12 fewer years in the workforce, as men.   This coupled with procrastination due to family commitments, lack of time for personal well-being, debt and financial fears, is why 30 percent of women age 65 and over are spending their retirement in poverty.  In the next 20 years, more than 40 million boomer women (born between 1946 and 1964) will reach retirement age and spend approximately 22 years there. With the odds stacked against them, women have no other option but to start early, save more, spend less and plan ahead for their financial future.

Start Early & Save More

Knowing where you want to go is the first step to getting there.  All too often, women take on the responsibility of caregiver to everyone but themselves and don’t realize how this lack of personal attention affects them until it is too late.  

The first step to saving is to budget, whether with your partner or alone.  Establishing monthly and annual budgets will afford you the ability to plan for savings, by setting goals and reasonable expectations of your finances and your savings vehicles. Although it can seem challenging to plan for something so far in advance, understanding that timeline and anticipating your needs will provide better results for your future.

The average woman starts saving two years to four years later and invests almost one percent less than the average man, when, in order to live comparably in retirement, women need to save at least two percent more than men each year.  If you begin saving $5,000 each year at the age of 25, compounded at eight percent annually, when you reach age 65, you will have $1.3 million in your retirement account.  Should you wait and not begin saving until 45, your retirement account will only house $230,000.

Developing a realistic plan around your objectives and goals and making educated investment decisions are the first steps to planning the tomorrow you deserve.  For many, life will be spent fostering the well-being of others, so remember to take the time to foster your own well-being and begin growing the wealth that can offer you a lifetime of financial security.

Spend Less, Ditch the Debt

Women tend to spend more, some relying on shopping for instant reward, which can lead to debt.  According to a recent study conducted by Meredith Corporation and NBC, 85 percent of women have existing non-mortgage debt, while 28 percent of women allow credit card debt to prevent them from saving.  Preparing for the future means not just living for today.  Stop paying interest on accumulated debt and instead start generating return on your investments, accumulating wealth for tomorrow. Those impulse buys and non-essential items that got you into debt will not retain their value, but planned savings can afford you an income for life, which is priceless.

Plan for You

Married women commonly make the mistake of allowing their retirement plan to rely on the savings of their spouse, without considering what could happen if she is not the first to pass.   Dependency on a spouse leaves 30 percent of unmarried women, due to death or divorce, living solely on income from Social Security. Take care of yourself, in any circumstance, by taking advantage of retirement savings plans available to you, investing enough money into your 401(k) to take advantage of any company match and rolling over that 401(k) when you leave the work force or change jobs. Many stay-at-home spouses do not take advantage of the fact that they too can have an IRA.  The spousal IRA allows for up to $5,000 per year in contributions in 2008 ($6,000 if age 50 or older as of 12/31/08), and requires the couple file a joint return, the working spouse has enough earned income to cover the contribution and the adjusted gross income does not exceed $159,000 per year.  Planning for retirement together with your spouse and in the event that you are now or will become single, is the best way to plan.

Live Longer

Healthcare is understandably a major concern of retirees, especially women.  Part of taking care of yourself is planning for your care, which means taking the time to learn about your healthcare options and their costs, in retirement.  Your financial plan and projected retirement income should take these costs into consideration and budget accordingly.

With at least 50 percent of retired adults requiring some form of assisted living, long-term care insurance is an investment that can’t be overlooked.  Although this coverage isn’t for everyone, acknowledging the potential need and investigating your options and costs today, could protect your assets and preserve your income in the future.  The cost of long-term care is based personal data such as age, health and family history and thus the cost could potentially increase with age.   Providing for your well-being means being prepared for the care you may need and the costs that will be incurred.

Retirement comes faster than you expect, so take time to care about you today. With the odds stacked against women, a forward thinking budget and reliable savings habit is the only defense against hardships in retirement.  Start today and educate yourself on available savings and investment options, learning the pros and cons and how each fits into your retirement savings plan.  It is never too early to develop a relationship with a financial advisor who can review your portfolio and help ensure it is working toward the achievement of your personal goals.

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