Don’t Stop Thinking About Tomorrow: 8 Retirement Strategies for Women

Some days it feels like my email box is glutted with articles on retirement planning.  With the first wave of the 76 million Baby Boomers careening through their mid-60’s today, it seems only natural that financial advisors are increasingly focused on retirement planning.  Boomers have been driving our nation’s trends from the day they were born!

A striking statistic in the midst of this retirement boom is that women have a 25% to 30% retirement savings shortfall when compared to men with similar savings and investing patterns.  Women have come a long way in terms of their earnings power for sure, but it appears, based on statistics, we have a considerable way to go when it comes to having a well-planned retirement.  It only stands to reason that women have not saved as much for retirement given we get paid less on average.  But other factors play into our retirement shortfall.  A major one is taking career breaks for childbearing and care-giving, which cause inconsistent work patterns.

However, it is never too late for working and nonworking women to employ one or more of these 8 financial strategies to improve their retirement income prospects:

Establish Your Own Saving Accounts – Because women have inconsistent work patterns we should not depend exclusively on employer plans for saving.  Consider using a Roth IRA, a traditional IRA, or even a taxable account while working to supplement your workplace plan.  And don’t miss out on saving during the years you are not working.  A working husband can make tax-deferred contributions to his nonworking wife’s spousal IRA (traditional or Roth).  The government provides good information at Individual Retirement Arrangements (IRAs).

Maximize Your Company’s Savings Plan – If you can afford to save the maximum allowed by law, do so, and if not, save at least the amount that will enable you to get your employer’s match.  The annual maximum contribution allowed by law is reported at Workplace Contributions.  If self-employed, the same maximum savings advice holds true.  You may be eligible to use a SIMPLE IRA, a SEP IRA, or a solo 401(k) for tax-deferred savings.

Take Advantage of the Catch-up Provision – As we approach our retirement years, it can be a race to the finish line.  The government allows workers over age 50 to contribute an additional “catch-up” amount to their tax-deferred savings plans.  The catch-up provisions apply to workplace plans, Roth IRAs, traditional IRAs, and SIMPLE plans as well.  Visit Catch-up Contributions for the annual limits.

Monitor Your Social Security Record – By creating an account at  you can periodically check your earnings record and estimated social security benefit.  Report any errors in your earnings record to the Social Security Administration.  Use your estimated SSA benefit for retirement planning purposes.  The customized schedule of estimated benefits at various ages is a valuable planning tool.

Review Beneficiary Designations – If it is your husband’s intent to leave his 401(k) and IRA to you, be sure you are named as the beneficiary.  A will does not direct the distribution of these accounts.  It is not uncommon for a 401(K) or IRA account holder to overlook changing their beneficiaries after a major life transition like marriage or divorce.

Pension Strategies – If your husband qualifies for a pension, election of the joint survivorship option guarantees you his pension income after he passes.  This election means his pension check will be smaller during your joint lifetimes than if he chose the single annuitant option. If you each have a pension, or if you have a pension and he does not, this may or may not be the most suitable election, depending on your other assets and income.

Divorcee Strategies – When you collect Social Security benefits, you can choose either your own benefit or 50% of your spouse’s benefit — and that’s true even if you and your (former) spouse are divorced.  To qualify, your marriage must have lasted at least ten years and both you and your ex-husband must be at least 62 years old.  If you remarry, you lose the right to benefits based on your former husband’s earnings unless your second marriage also ends in divorce.

Financial Advisor – Less than half of Baby Boomer women consult a financial advisor, yet a majority (over 60%) of women over 55 believe they have not done a good job planning for retirement.  If finding a reputable advisor is a concern, ask a trusted friend, family member, or a respected professional service provider such as your lawyer or CPA.  If fees cause you reluctance to hire an advisor, ensure that any prospective advisor discloses all their fees (trading, mutual fund, percent of assets, termination, tax reporting, etc.) and all the services they will provide.  Candidly ask yourself:  Can the financial advisor help you reach your retirement goals better than you after taking fees into consideration?

The good news is that women do plan for retirement.  Surveys find that women look at retirement with an eye to lifestyle:  we make concrete plans about finding meaningful encore careers, volunteer work, and hobbies.  We focus on ways to stay healthy.  Similar surveys report that men tend to be skipping the dreaming part.  So, the bottom line is, we are thinking about “tomorrow” and just have to fine tune our dreaming to focus more on the financial planning.