Financial Focus: Here are some ways women can work toward secure retirement
March 1, 2018
On March 8, we observe International Women's Day. This year's theme is "Press for Progress," and events around the world will celebrate women's advancements in the political, social and cultural arenas. But right here in the United States, women still face barriers to their financial progress. If you're a woman, then you need to recognize these challenges — and respond to them.
So, what are the key obstacles to financial security for a woman? Probably the first thing that comes to mind is the gender wage gap: Women generally earn around 80 cents for every dollar men earn, according to the U.S. Census Bureau.
But women also face other threats to their financial security. For one thing, they are far more likely than men to take time away from the workforce to raise a family — and time away means smaller Social Security payments and significantly lower balances in 401(k) plans and other retirement accounts. And women's roles as caretakers don't end when their children are grown — in fact, women are twice as likely as their male siblings to end up caring for an elderly parent, according to a Princeton University study.
What, then, can you do to help ensure a comfortable retirement and achieve your other financial goals? Here are a few suggestions:
Invest for Long-term
• Take full advantage of your employer's retirement plan. If your employer offers a 401(k) or similar retirement plan, then take full advantage of it. Invest as much as you can afford each year, and every time you get a raise, increase your contributions. At the very least, put in enough to earn your employer's matching contribution, if one is offered.
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• Invest for the long term. Some evidence shows that women may be more conservative investors than men. But if you want to reach your long-term goals, then you will need to consider some growth-oriented investments in your portfolio, factoring in your risk tolerance and time horizon. You may want to consult with a financial professional about the best way to invest for the long term.
• Maximize your Social Security. If your spouse is the higher earner, then you may want to consider how you can use this disparity to your advantage when you collect Social Security. Specifically, you may be eligible for Social Security benefits based on your spouse's earnings and Social Security record. You'll want to consult your tax advisor before making any moves.
Prepare for care costs
• Protect yourself from long-term care costs. More than two-thirds of nursing home residents are women, according to the National Center for Health Statistics. And the median rate nationwide for a private room in a nursing home is over $97,000 per year, according to the Genworth 2017 Cost of Care Survey. Medicare generally pays very little for long-term care, so if you ever need these services, then you'll have to find other ways to pay for them. A financial professional can suggest some ideas.
As a woman, you face special financial challenges, and striving to overcome them will be a lifelong activity. But it's worth the effort.
This article was written for use by local Edward Jones financial advisors. Edward Jones and its associates and financial advisors do not provide tax or legal advice. Chuck Smallwood, Kevin Brubeck, Tina DeWitt, Charlie Wick and Bret Hooper are financial advisors with Edward Jones Investments and can be reached in Edwards at 970-926-1728, in Eagle at 970-328-4959 or in Avon at 970-688-5420.