Tahoe-Truckee Market Beat: Financial planning issues for women
Special to the Sun
Long-term financial planning requires making numerous estimates. You have to estimate your life expectancy, how much you can save, investment return, inflation, and how much income your savings will produce in retirement.
When it comes to long-term planning, women face some different issues than men and should plan accordingly.
One is life expectancy. According to the US Social Security Administration, a girl born today has an average life expectancy of 80.94 years, while a boy has an expectancy of 76.10 years.
The numbers are similar for people in retirement age; a 65-year-old female today has a life expectancy of 20.20 years, while 65-year-old males have a life expectancy of 17.57 years.
Women in traditional marriages typically marry older men, so most women can expect to spend a few years in widowhood at some point in their lives.
Females also have a tendency to invest more conservatively than men and underestimate how much money will be required for a comfortable retirement. According to a Harris Interactive poll, almost one-third of middle-age women don’t know how to estimate how much they can withdraw from their retirement accounts.
Raising families also enters the picture — many women take time out of the workforce to raise children and now are also retiring earlier to assist with raising the grandchildren or helping out with elderly parents.
Many women work part time jobs that don’t offer retirement plans. According to the US Department of Labor, of the 62 million wage and salaried women in the US, just 45 percent participate in a retirement plan.
Even though women live longer, they’re not necessarily healthier, so medical costs in retirement need to be estimated as well. Heart disease is the No. 1 killer of women and is more deadly than all forms of cancer combined.
Younger women should look for jobs that offer retirement plans and begin saving as early as possible.
Understand how much income you’ll need in retirement and what types of investments will help you reach your long-term goals.
Women in or approaching retirement should educate themselves on investments that are the most efficient for producing income.
Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at http://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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