6 retirement planning steps for women

Women, money and influence

Key takeaways

  • Planning can help women overcome several unique financial challenges around saving for retirement.
  • Elements of a comprehensive financial plan include an investment strategy, an estate plan and sufficient insurance coverage.
  • Planning should also include a retirement income strategy, understanding how and when to collect Social Security benefits.

Financially speaking, women are headed in the right direction.

Yet it’s also true that you face complicated scenarios when it comes to retirement planning, whether building your career or caring for your loved ones; partnered, married or single.

A key to approaching this period of life with confidence is to have a comprehensive financial plan in place. A plan will help you clearly identify near- and long-term goals, consider the financial challenges associated with a long-life expectancy, and account for the potential of unexpected events.

Here are six planning tips to keep in mind as you work toward a more secure financial future.

1. Know your goals and milestones

When asked to prioritize their planning goals, the number one concern for women is to have enough money for retirement.1

Planning for retirement begins with preparation:

  • Assess your current income and spending habits.
  • Identify your short- and long-term goals.
  • Factor in who you’ll spend your retirement with and where you’d like to live.
  • Account for the realities of a longer life expectancy.

Having a vision of what you want to achieve can help you stay more focused as you work toward your goals.

2. Invest early and often

It’s important to start investing as soon as possible. The reason is simple – the power of compound interest. The longer your money can grow, the more money you can accumulate before you retire. The good news is women tend to hold their investments for longer periods than men, which can help grow wealth over time.2

Try to set aside 10 to 15% of your income for retirement. Consider exploring these investing and savings options:

  • Save pre-tax dollars in a workplace retirement plan such as a 401(k), if one is available to you. Take advantage of any employer-offered match to your own contributions.
  • Make regular contributions to an IRA or other tax-advantaged savings vehicles.
  • If you’re self-employed, leverage SEP or SIMPLE IRAs to save money.

If you’re 50 or older, the amount you can contribute to your 401(k) and IRA increases. Learn how these catch-up contributions can make a meaningful difference in your retirement income. Keep in mind that diversification and asset allocation do not guarantee returns or protect against losses.

3. Plan your estate

Estate planning is an issue that’s easily overlooked. However, a financial plan is only complete when you prepare not just for the distribution of your assets after your death, but for the possibility of an untimely death, disability or illness.

A key to approaching retirement with confidence is to have a comprehensive financial plan in place.

Written wills and/or trusts, powers of attorney and healthcare directives should be drafted by your attorney and kept current. Regularly review your beneficiary designations to make sure they’re up-to-date. If you don’t have a plan in place, you lose control of who may act on your behalf and what may happen to your assets.

If other life changes occur, such as the end of a marriage or the death of a spouse, be sure you’re closely involved in any consequential financial decisions that need to be made. If you find yourself in one of these difficult situations, don’t be afraid to lean on your network of friends and family for advice and support.

4. Protect your assets

No matter how carefully you plan, the unexpected is bound to occur. Even in your 50s and 60s, a well-prepared retirement plan can take a major hit from an unforeseen event.

Insurance serves as a potential safety net. Assess your existing insurance coverage to check for gaps. The list may include home, auto, umbrella, health, survivor income, disability, life, and long-term care insurance. Remember to review your policies once a year to make sure they continue to provide appropriate benefit levels and function together cohesively.

Any change in circumstances, from fluctuations in investment or home values, to marriage, divorce, a birth or a death, may warrant changes to coverage, as well as a review of the beneficiaries tied to certain policies.

5. Build a retirement “paycheck”

Some people aren’t prepared to make the adjustment that comes when they retire and no longer receive a regular paycheck from work. Part of the planning process is to determine how you’ll generate reliable income to help you sustain your lifestyle in retirement. This can include your personal savings, distributions from IRAs and workplace retirement plans, pension distributions, payouts from annuities, inheritances and Social Security.3

The planning process will help you estimate the amount of income you’re likely to generate from various sources. More important, it will identify potential income gaps. Increasing savings, changing your spending projection or choosing to retire later are ways to overcome such gaps.

6. Understand the role and rules of Social Security

Social Security provides a stream of reliable income that can play a significant role in retirement. Part of the planning process is to determine at what age you should begin collecting benefits. You can start as early as age 62; however, the sooner you start receiving benefits, the lower the monthly benefit will be.

If you choose to delay taking benefits, the amount of the monthly benefit increases by 8% each year until age 70. You want to be sure to assess your options and determine how Social Security fits in within the context of your broader wealth plan.

Another option to consider is a “spousal benefit,” which is based on your spouse’s work history. Disability, divorce, and death of a spouse may mean taking benefits early. The Social Security benefit calculator can help you plan your Social Security income for every scenario.

Learn how we can help you plan for retirement.