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What women need to know when they retire

Originally published on Marketwatch.com’s website http://www.marketwatch.com/story/retirement-planning-considerations-for-women-2015-02-02?link=mw_home_kiosk

Young people entering the workforce need to educate themselves about the retirement-planning process. Women in the early stages of their retirement planning should be aware that they will face some different challenges than their male coworkers.

One of the key differences is life expectancy. On average, women live longer than men do. Girl babies born today will live almost 81 years, while boys are expected to live just over 76 years. According to the U.S. Social Security Administration, the average 25-year-old male today will live another 52.34 years and the typical 25-year-old female should live another 56.77 years.

Because of the difference in life expectancy and the fact that most women marry men who are older than themselves, most men will die married while the majority of women will die as widows. Over 50% of women above the age of 65 are widows, and they outnumber widowers by a ratio of three to one. So, when you start thinking about your retirement planning, plan on a fairly long life and be prepared for the possibility of widowhood at some point, or marry a much younger man!

Another area where there’s a significant difference between typical men and women is the amount of time taken out from the workforce to care for family members. Most women some take time from work to raise children. Women today are retiring earlier than men to assist with raising the grandchildren and are also more likely to take time off to care for their elderly parents.

Many women work part time jobs that don’t offer retirement plans. According to the U.S. Department of Labor; out of the 62 million wage and salaried women in the U.S. over half, 55%, do not participate in a retirement plan at work.

There is also a tendency for women to invest more conservatively than men, and according to a Harris Interactive poll, about one-third of middle-aged women do not understand how much can be safely withdrawn from a retirement plan.

When women start out with their retirement planning they need to be aware of the factors discussed above and educate themselves about the investment process. Understand the effects of inflation and what asset classes have a history of outpacing inflation. Seek out employers that offer retirement plans. Learn how to estimate how much income you’ll need in retirement and how much you can realistically expect to receive from your retirement savings.

Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at www.sellacalloption.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.


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