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In years past, women typically earned much less than men (fortunately, this has started to change). Because they earned less, women were not able to save as much for retirement. Federal law establishes the maximum percentages that workers can contribute to retirement plans. Assuming that two workers both contribute the maximum amount allowed to their retirement plans, a male worker who earns $60,000 will save more than a female worker who earns $40,000. Women must also make what they can save last longer. According to the Social Security Administration, the life expectancy of a man who is 65 today is 84.3 years. The life expectancy of a female who is 65 today is 86.6 years – a difference of almost 2.5 years.
Many women who are now retired are not as educated about finances as women of subsequent generations. They let their husbands manage the money, and frequently are unintended victims of poor decisions made by their spouses. This is especially true when considering both defined benefit pensions and Social Security elections. Retirees generally have the choice of applying for a higher benefit that lasts for their own lifetime, or a reduced benefit that is paid over the course of both their lifetime and that of their surviving spouse. Many insist on applying for the higher benefit under the premise that they need a higher income on which to live. If they are the first to die, though, their spouses are cut off completely. Many primary wage earners also make bad decisions when applying for Social Security benefits, never considering how their actions will affect their spouses. The decisions they make can mean a difference of about $25,000 in Social Security income every year, for their surviving spouse.
The good news is that, even if you are retired now, there are steps you can take to improve your outlook in retirement. Consider some of these options:
It is important to remember that there is no one-size-fits-all answer to this problem. In order to make sure that you are financially secure, it is imperative that you contact a financial professional that you can trust and discuss these points in detail. A good fee-based advisor will be able to guide you through the best possible choices for pensions, Social Security, investment planning and long-term care expenses.
CPA and Attorney who specializes in the field of Estate Planning. He is the best-selling author of Retire Secure! and The Roth Revolution. Jim teaches common-sense, easy to understand strategies to help make your money last longer. For a free copy of his most recent book, The Little Black Book of Social Security Secrets, visit a href="http://www.paytaxeslater.com">paytaxeslater.com.
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