Do Women Face Greater Retirement Challenges Than Men?

If so, how can they plan to meet those challenges?

By Rebecca Bar-Shain, CFP®, Cedar Brook Group

Why are women so challenged to retire comfortably? A woman may spend less time in the workforce during her life than a man due to childrearing and caregiving needs with a corresponding interruption in both wages and workplace retirement plan participation. A divorce can hugely alter a woman’s financial outlook. As women live longer on average than men, they face the risk of eventually outliving retirement savings. There is also the gender wage gap, narrowing, but still evident.

What can women do to respond to these financial challenges?

Invest early & consistently Women should realize that on average they may need more years of retirement income than men. Social Security will not provide all the money they need. Accumulated retirement savings will need to be tapped as an income stream. So saving and investing regularly through IRAs and workplace retirement accounts is vital, the earlier the better. So is getting the employer match, if one is offered. Catch-up contributions after 50 should also be a goal.

Consider HSAs An HSA (Health Savings Account) is funded with pre-tax dollars, so an HSA owner can potentially get tax-deductible contributions as well as tax-free growth and tax-free withdrawals. HSAs are used with high-deductible health plans and HSA savings must be withdrawn to pay for qualified health expenses in order to be tax-exempt. One intriguing HSA detail: after attaining age 65 an HSA owner can withdraw HSA funds for non-medical expenses (these types of withdrawals are characterized as taxable income). That fact has prompted some journalists to label HSAs “backdoor IRAs.”

Work longer in pursuit of greater monthly Social Security benefits Working even two years longer means two years less of retirement to fund and for each year she refrains from filing for Social Security after age 62, her monthly Social Security benefit rises by about 8%.

Find a method to fund eldercare Many women are going to outlive their spouses. While many women may not need months of rehabilitation, in-home care or hospice care, many other women will.

Today, financially aware women are planning to meet retirement challenges. They are conferring with financial advisors and strategizing to take greater control over their financial futures.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Rebecca L. Bar-Shain, CFP, MBA, Financial Planner & Partner
Cedar Brook Group
440.683.9258
Cleveland, Ohio 44124

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