need to retire, and that will take money.
IN YOUR
• Don’t put your retirement in jeopardy by taking on excessive debt for college for your children. Get professional advice to see what you can afford to pay.
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• Contribute at least 5 percent of your salary (or more); every time you get a promotion, increase your contribution by that percentage.
• Contribute the maximum annual amount to your employer’s retirement plan. Every year. No excuses.
• Invest in stocks. You can afford to take more investment risk at this age.
• Start adding bonds to your mix. Diversification is important.
• Don’t focus too much on paying off student loans as the money you save now can really put the power of compounding interest and the Rule of 72 (see note at end) to work for you. By all means pay your loans, but don’t try to pay them down too aggressively and limit your ability to put away for retirement.
• Starting at age 50, you can contribute more to your retirement savings plan(s). It’s called “catch-up.” So, start catching up. Now.
• Live below your means.
YOUR
• Add bonds or bond funds to your investment mix. Keep adding to your Roth IRA. • Begin planning your legacy: write (or update) your will and other estate planning documents. If you haven’t already, consider long-term care insurance. You’re going to need some sort of plan for long-term health care.
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• If you haven’t started saving for retirement, get started. Right now.
YOUR MID-
• Live within your means and don’t look at retirement savings as a way to buy a bigger house than you can afford on your salary(ies). It is important to leave retirement savings for retirement. At this stage, the temptation can be the greatest to dip in to your retirement nest egg. • Be careful of debt. It’s a bad habit to start and a harder one to break. Get one credit card. Just one. Pay off the balance every month. Be mindful of your credit score; a higher score means you’ll qualify for lower interest rates on mortgages, auto loans, etc. • If anyone depends on your income (spouse and/ or children), don’t skimp on life insurance.
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• Save, save, save and make the final push for your retirement goal. Remember this: You can still afford to take some volatility and risk as you won’t be depleting your entire nest egg the first year you retire. Many pre-retirees think they need to put their money in the mattress, at this point, and forget if you retire at age 65 for instance, you will probably need 20+ years of retirement income. Let the equity markets and compound interest work for you.
YOUR
S
• Hopefully, you’ve been doing everything listed above for a long time now.
YOUR
& EARLY
• Sometime in your 60s you’ll begin reversing the process. This is the time to get professional help. Retirement plan withdrawals have tax consequences, so proper planning is crucial.
S
S
• Walk the fine line between helping children with their education, but remember you
• Re-think your personal legacy and update your estate documents. • Don’t go through your money too quickly. Again, you will likely need your money for 20+ years. You will probably spend the most
money in the first 10 years of your retirement. • Enjoy your retirement, but be realistic. The early 50s on through retirement are hyper critical to getting comprehensive financial advice on things such as when to take Social Security, which accounts to tap first for retirement (taxable, non taxable, tax deferred), whether or not to take a part time job, health insurance needs in retirement, etc. At this point flexibility is a big plus as a big plunge in the market can suddenly leave a big gap in retirement income. W NOTE: The ‘Rule of 72’ is a simple way to figure out how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself. Under the rule, $1 invested at 10% would take roughly 7.2 years ((72/10) = 7.2) to turn into $2.
What Every Woman Should Know
1
Women live longer as a rule, so they need to save more for a longer retirement.
2
Many women spend fewer years in the workforce and in many cases earn less than men even for the same job, which contributes to lower pension and Social Security benefits.
3
Lower pension and Social Security benefits mean many women may need to invest more aggressively and begin contributing to their retirement savings as early as possible.
4
Since females tend to outlive males, they should be actively involved in the retirement/ financial plan for the family to ensure joint assets will not be wiped out should their spouse incur significant medical expenses, leaving them with little to live on. — Source: Salvatore T. Valente, president/C.E.O. with The Valente Group in Johnstown.
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