With the economy currently in a recession, it is not uncommon to hear about older generations that are already in retirement losing their homes or not having enough money to live off of. It is extremely sad and heart wrenching to hear these stories but there may be some things that you can do to prevent these unfortunate occurrences happening to you.
Even today, women are more affected by poverty in old age than men. Why? – Women live about 5 years longer than men. Although this may not seem like that long, it adds up quickly when money is involved. Not only do women live longer, but they are also in retirement for longer. According to MSN.com, women retiring at the age of 65 have about another 20 years of life where men only have about 17 years.
So, what can you do to prevent yourself from falling below the poverty line in retirement? These four easy suggestions may be a good starting point.
1. Don’t Count Solely on Social Security – We have seen recently how much money people can lose when the economy takes a sudden turn for the worse. Make sure you are taking full advantage of a 401(k) that may be offered by your company and also set up a separate retirement account for yourself. Social security is too financially unstable to depend only on that. You can include your social security in some of your calculations, but make sure to consider that this may not be 100% guaranteed in the end.
2. Educate Yourself – You want to be as knowledgeable about your own finances as you can get. This way when you find yourself in a tight spot you can find ways to work your way through it until things look up. According to an article on MainStreet.com, women are often times overwhelmed by financial information. Make sure you are taking the first step in the right direction. If need be, ask for help!…You can always find great information in our Geezeo Blog or Groups such as Ask the Expert: Farnoosh Torabi and Penny Pinching To Early Retirement where people might be able to answer your questions and offer advice (for free!!).
3. Set Up Your Health Coverage – Make sure you are all set with your health insurance and possibly look into long term care before you enter retirement. Medical costs add up quickly and you don’t want to be caught without coverage. If you have a spouse make sure that you have this discussion with one another to make sure you are both covered. Don’t go without! Although at the beginning of retirement you might think you are okay, as time goes on little things can start happening and the costs can add up. Better safe than sorry!
4. Work For As Long As Possible – I know that many people like to take the time off to be with their children and grandchildren, but the fact of the matter is, the longer you work the more money you can put towards your 401(k) which will definitely help you in the long run. Even if you can’t stay with your full-time job, work part-time at something you think you might enjoy. Although this may not contribute to your 401(k) it will still bring a little bit of income into the house and as we all know – every little bit counts!
The statistics for women in retirement are grim. Women are 71% more likely to live below the poverty line than men in retirement. Take these suggestions into consideration and hopefully we can lower than percentage and fewer women will be affected by poverty in their “golden years.â€
Photo: Jane M Sawyer
Related Articles:
How To Find The Best Financial Advice For Women
Four Smart Ways to Invest Tiny Sums
Roberta McCain is financially independent at 96. Will you be?
October 15th, 2008 at 10:52 am
[...] Poverty Among Women Increasing During Retirement – 4 Tips to Help Prevent this Happening to You! Imagine a World Where Shares are Shared… Is Your Spending Vulgar, or Virtuous? [...]
October 15th, 2008 at 3:51 pm
[...] 4 Ways Poverty Impacts Your Personal Finances Poverty Among Woman Increasing During Retirement – 4 Tips to Help Prevent This From Happening To You Blog Action Day [...]
October 15th, 2008 at 3:59 pm
For some who have their mortgage paid off, it might make sense to reconsider that in order to maximize cashflow. As an example, one could take out a mortgage on 80% of the value of the home and invest it into a diversified portfolio of equity mutual funds. Would you borrow money that costs you ~6% and invest it so that it earns ~8% over the long haul? If so, it could offer some additional retirement income.
October 15th, 2008 at 5:02 pm
[...] Poverty Among Women Increasing During Retirement – 4 Tips to Help Prevent this Happening to You! 4 Ways Poverty Impacts Your Personal Finances Uninsured? 3 Steps To Take Cramer: How to Avoid Being Poor 2 Questions to Ask Yourself Regarding Global Poverty [...]
October 16th, 2008 at 8:51 am
It is a sad state of affairs and the tips you offer will go a long way in helping. But the problem is deeper and systemic. I have yet to hear the candidates address this issue although I believe the Sen. Obama has closer personal ties to such problems than his opponent. And if the candidates do anything, they should focus on two disturbing issues – marriage and divorce.
There is no doubt in anyone’s mind that divorce is the single biggest retirement problem for women. More forward thinking laws about how assets are distributed by those who decide such cases, regardless of the representation either party has would help a great deal. Often the party with the best paid attorney trumps. Judges who decide these cases should champion the rights of the weaker – better yet, the historically underrepresented party. And I am not talking even splits here but instead percentage division based on who has earned the most, who will be taking care of the children and who will be living where.
Of course, better marriage contracts, reconstructed at the onset would do wonders to offset the possibility of this occurring years later. For “better or worse†should probably read: “The lesser wage earner should get half of all assets inclusive of retirement accounts and 10% in addition for each child born to the relationship.â€
This acts as state mandated pre-nup and doesn’t take into consideration how much debt is accumulated or whether bad financial decisions will be made over the course of marriage, but it should shore up some of the retirement issues you brought up.