Important to plan early for retirement — especially for women |

Important to plan early for retirement — especially for women

Ken Roberts

Women have an even greater financial planning need than men do. There are several reasons for that, including earnings and life expectancy. Women control a large percent of the wealth in this country.

There are almost nine million female-owned businesses in the United States, and that's an increase of about 60 percent since 1997. About half of households with a net worth greater than half a million dollars are headed by women. Women earn more than $1 trillion per year.

Women also live longer than men do. On average women live seven years longer than men and the average age of widowhood is 56. About one-fourth of widows go through their husbands death benefits in just two months, and one in two marriages ends in divorce. Women also take quite a bit of time from work to raise children. The average time out of the labor force for child rearing is 11 ½ years.

According to some data from a recent Harris Interactive poll, women tend to not be well prepared for retirement. About one-third of women between the ages of 40 and 69 don't know how much money they can safely withdraw from their retirement funds. Almost one-third of women in their 40s and 50s estimate they can withdraw between 11 percent and 30 percent of their retirement funds each year. That is a very high withdrawal rate and will likely lead to depleting your hard-earned savings.

If your goal is to preserve your principal you should start withdrawing at a rate about 4 percent per year and increase that by the rate of inflation each year. So if you have a $100,000 account, you should only take $4,000 the first year and plan to increase that by 2 to 3 percent each year. So the second year you might take $4,120 and so on. If your goal is to spend your fund down over your life expectancy, then run a calculation based on your life expectancy.

Both men and women don't save enough for retirement. However, women save even less. Men have an average retirement savings account of $25,000 while women have only $20,000. Women also have a tendency to set lower goals for their retirement fund. Despite greater life expectancy, when asked how much they were planning for in retirement savings women had a lower target of $200,000 versus $400,000 for men.

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It's very important to plan early and set realistic goals.

Kenneth Roberts is a Truckee based Registered Investment Advisor. Information on his money management service can be found at his blog at or by calling 775-657-8065. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.

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