September 19, 2018

Retirement planning tips for single women

By Jim Miller

Dear Savvy Senior,

What retirement planning tips can you recommend to single women? I’m 54 and divorced with a teenage daughter and very little saved for retirement.

Financially Behind

Dear Behind,

It’s an unfortunate reality, but most single women – whether they’re divorced, widowed or never married – face much greater financial challenges in retirement than men. Why?

Because women earn less money – about 80 cents for every dollar that men make, on average, and they have shorter working careers than men due to raising children and/or caring for aging parents. Less money earned usually translates into less money saved and a lower Social Security benefit when you retire.

In addition, women live an average of five years longer than men, which requires their retirement income to stretch farther.

It’s very important that women educate themselves on financial matters. Listed below are some tips and resources that may help.

Start Saving

If your employer offers a retirement plan, such as a 401K, you should contribute enough to at least capitalize on a company match, if available. And if you can swing it, contribute even more. By law, you can save as much as $18,500 in a 401(k) in 2018, or $24,500 to those 50 and older, due to the catch-up rule.

If you don’t have a workplace plan, consider opening a Traditional or Roth IRA. Both are powerful tax-advantaged retirement savings accounts that let you contribute up to $5,500 annually, or $6,500 when you’re over 50. If you’re self-employed, consider a SEP-IRA, SIMPLE-IRA and/or a solo 401(k), all of which can help reduce your taxable income while putting money away for retirement.

Also, if you have a high-deductible health insurance policy, you should consider opening a health savings account (see HSAsearch.com). This is an excellent tool to be used to sock away funds pre-tax and use them to pay for medical expenses.

Find Your Number

Get a handle on how much you need to save for retirement. You can do this through a number of free online calculators like ChooseToSave.org or FinancialMentor.com/calculator.

Pay Off Debt

You need to get debt under control. If you need help, consider a nonprofit credit-counseling agency that provides free or low cost advice and solutions. To locate an agency, use the National Foundation for Credit Counseling website at NFCC.org or call 800-388-2227.

Find Help

To educate yourself on financial matters like retirement planning, saving and investing, health care, annuities and more, a top resource is the Women’s Institute for a Secure Retirement at WiserWomen.org.

To help you get up to speed on Social Security, visit SSA.gov/people/women. This web page provides helpful publications along with links to benefit calculators and your Social Security account to help you figure out future earnings at different retirement ages.

Consider getting a financial assessment with a fee-only financial advisor. See NAPFA.org or GarrettPlanningNetwork.com to locate an advisor in your area.

Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.

Speak Your Mind