There are many unknown variables when planning for retirement, and even high-net-worth couples often feel overwhelmed when discussing their financial future. However, women face particular challenges – on average they live five years longer than men, requiring more assets to sustain those extra years of expenses. Women also face other challenges – many are still paid less over the course of their careers than their male counterparts and women are out of the work force for an average of 12 years to care for children and aging parents.
With all these factors, it is even more critical for women to plan in advance for retirement. Here are some tips to consider.
Maximize Retirement Plans
If there is a retirement savings plan sponsored by your employer, make sure you optimize that plan. If you can’t contribute the maximum ($18,500 per year) to your 401(k), try increasing the amount you save each year. Many employers offer to match your contribution, so at the very least, save the amount your employer will match. If you are 50 or older and have saved the maximum for the year, there’s a special catch-up provision that allows you to contribute an additional $6,000.
Also, find out if your plan offers a Roth 401(k) option which allows you to save after-tax dollars for retirement to grow tax-deferred. If you think you will be in a higher tax bracket in retirement than you are currently, a Roth 401 (k) may be a suitable investment vehicle for you. It is important to consult your accountant to make sure this strategy is suitable for your tax situation.
If you don’t have a retirement plan with your employer, make sure you contribute to an IRA (Individual Retirement Account). As of 2018, an individual may contribute $5,500 to a traditional IRA per year, or $6,500 if you are 50 or older.
Prepare for Healthcare Expenses
Healthcare costs are a significant factor to consider. On average, couples will spend $280,000 on combined health care expenses – with $147,000 being the average healthcare tab for women alone. If you’re younger and healthy, and your company offers a high-deductible health care plan, consider taking advantage of a health savings account (HSA). An HSA can only be paired with a high-deductible plan. You can contribute to the account to use now or let it grow for use in retirement. The funds roll over every year, grow tax-deferred and can be used tax-free on qualified healthcare expenses. If you’re planning to use this in retirement, HSA funds can be invested.
Be Strategic with Assets
Being strategic and defensive with assets can help women plan for retirement needs such as long-term care. Many want protection in case long-term care is needed, but if it is not, those assets may be put to better use elsewhere. Hybrid long-term care and life insurance options can be a useful solution to consider to prepare you for these needs. These policies allot a certain amount of the death benefit for long-term care, should that be necessary. However, if you don’t need long-term care, then your beneficiaries will receive the full death benefit.
When creating a financial plan, remember that it is a living, breathing document that should be revisited at least annually with an advisor. No one can perfectly estimate what their retirement needs are going to be, but an advisor can help you create a plan that is in line with meeting your objectives. As life and the economy changes, it’s essential to reevaluate your plan and make sure you are still on the road to a secure financial future.
The earlier you start to save, the better, but it’s never too late to start saving. Consider this, if you saved just $100 per month (approximately the cost of getting a weekly manicure) for 20 years and earned an interest rate of 5%, you would end up with more than $40,000. With the right planning, retirement can be something you look forward to as well as afford. If you’re interested in speaking with an advisor, reach out to us at: 215-721-2112.
Please note that this communication is for informational purposes only and neither this financial institution nor any of its affiliates give tax or legal advice. Consult a tax advisor regarding what may be best for your personal situation.
Securities and insurance products are offered through Univest Investments, Inc., member FINRA/SIPC and a licensed insurance agency. Investment advisory services are offered through Girard Partners, a Univest Wealth Management Firm. These affiliated companies are licensed subsidiaries of Univest Corporation of Pennsylvania. Products and services offered are not FDIC insured, are not a deposit of or bank guaranteed, and are subject to risks, including possible loss of any principal amount invested.