Financial Planning Tips for Women

By Barbara O’Neill, Ph.D., CFP®, Rutgers Cooperative Extension, [email protected]

Women face unique financial differences from men related to longevity, career differences, and family responsibilities. They are also less likely to remarry and more likely to live alone in later life. Half of women in their mid-50s today will live to be age 90.

The American Savings Education Council (ASEC) recently held a program that focused on special considerations that women face in achieving financial security in later life. A key point was that the decisions that women make in their younger years will greatly affect their standard of life later. One speaker advised “Make a positive difference in your financial life because you will be the one that is stuck with it.”

Below are ten tips from the ASEC program speakers to share with female service members:

1. Figure Out How Much Retirement Will Cost– Use a simple planning tool such as the ASEC Ballpark Estimate calculator to figure out how much money you will need and how much you need to save annually to reach this goal. The Ballpark Estimate is available as both a downloadable worksheet and an online calculator.
2. Get Legal Matters and Papers in Order– Draft key legal documents including a will, living will, and durable power of attorney and review these documents periodically as life events and changes in wealth levels occur.
3. Examine Social Security Options– Review your projected Social Security benefit by setting up an online account at https://www.ssa.gov/myaccount/. Carefully review benefit amounts available at ages 62, full retirement age, and 70 and weigh this data against personal factors (e.g., health status and financial need).
4. Avoid Giving Too Much Money to Adult Children– Set a cap on interfamily transfers to avoid diverting potential retirement savings for the living expenses of adult children (e.g., loan payments and cell phone bills).
5. Avoid Quitting a Job for Care-Giving– Keep income and grow future retirement savings by staying on the job. To balance work and family, explore options such as flexible work hours, telework, and adult day care.
6. Review Beneficiary Designations– Check the beneficiary designations on employer retirement savings plans and insurance policies and revise them as needed (e.g., following a death or divorce).
7. Save Early and Often– Establish an emergency savings account. At the same time, start funding an employer-sponsored retirement plan and/or an individual retirement account (IRA). Both savings goals (an emergency fund and retirement savings) are very important so it is fine to multi-task them to maximize compound interest.
8. Learn the Rules– Study the rules of the systems that you plan to rely on for income in later life (e.g., Social Security, Medicare, a pension, and tax-deferred employer savings plan).
9. Take Advantage of Available Savings Supports– Try to earn the maximum match available through an employer retirement savings plan. Another support for savings is financial education programs available at worksites and through Cooperative Extension.
10. Consider Annuitizing Some Retirement Savings– Purchase an annuity to avoid running out of money. Along with Social Security, an annuity will make monthly lifetime payments. Look for an annuity with low expenses.