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Women Retirement Income Guaranteed

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The majority of women still unfortunately earn less than men during their working years. The statistics support the fact that most women live longer than men, and will likely end up alone.  When it comes to retirement savings, women continue to lag behind men.  They’ll spend enormous time and energy taking care of everyone else, then neglect themselves.

The good news for women: they live longer, so they will have longer to enjoy their retirement. The bad news: they live longer, and so their retirement will be much more expensive than for their male counterparts.  While living longer is clearly a positive, it also means women have a greater possibility of outliving their retirement savings.

Women tend to outlive their husbands. Only one-third of women over sixty-five are married, and on average women will survive their husbands by fifteen years.  The combination of being on their own and living longer means that women need far more retirement income than do most men.

Women have a 50% greater chance of being impoverished after age 65 than men. So they’re impoverished and, because they worked fewer years on account of child rearing, lower income and less time in the workforce also means lower Social Security income which is a potentially significant blow to retirement income.

Women often think that they can rely on their husbands’ pensions, but they are wrong. Let’s assume that a couple is living on the husband’s pension, and the woman dies. Though grief-stricken, the husband suffers no financial detriment, and goes on collecting his full pension. But let’s say the husband dies first, as is ordinarily the case.

His wife will probably get only 50% survivor benefits, which won’t come close to providing her the income she needs to carry on her life-style. No wonder 41% of older women are living close to the poverty line. Not surprisingly, most widows who are poor now were not poor before their husbands died.

Because so many women work in part-time jobs or for employers who don’t offer retirement benefits, fewer have defined benefit pension plans. And those with plans have smaller pensions because of less time in the workforce. Women may also be less likely to participate in retirement plans because of lower compensation.

The three top simple goals for financial well-being include making a plan, paying off your bills and planning for the future no matter what your gender. Men and women have the same financial opportunities (and risks), the same vehicles for saving, investing, and borrowing.  However, their circumstances and choices can be very different.

With longer life expectancies and longer time horizons, women investors are well served to invest in asset classes that will continue to grow once their retirement begins. Putting most of your eggs in one basket can throw a wrench into your retirement plans.

Volatility in the stock market can make your stomach churn, when most of us are faced with financial trouble, we lose sleep and the volatility of an unstable stock market causes even the most savvy investors to reach for the Pepto-Bismol.

With all of the ups and downs in the stock market, many investors have been asking this question, “Is there a way to make money in the stock market and still have a way not to lose my principal is the market goes down?”  Women who want to take advantage of the growth potential of the stock market should consider a fixed-indexed annuity.  A fixed indexed annuity is an annuity that earns interest that is linked to a stock or other equity index. One of the most commonly used indices is the Standard & Poor’s 500 Composite Stock Price Index (the S&P 500.

Considering this, there is one thing an annuity does really well, which is to provide a hedge against longevity risk, and if you are buying it for that reason, an annuity can be a good investment.   An annuity allows an investor to convert a lump sum in a 401(k) or other investments into a stream of periodic income payments over the annuitant’s lifetime.  Since you’re building a paycheck that might last 20 or 30 years, a woman retiree or near-retiree who wants to avoid the stock market and is looking for a predictable rate of return a fixed indexed annuity is certainly worth consideration..

A fixed indexed annuity with an income benefit can be a good idea as a safety net for a woman planning for retirement in the next 10 years or so:  With fixed indexed annuities, you have the opportunity to grow your underlying assets with exposure to the stock market. But if the market has the kind of colossal downturn we’ve seen recently and you’re retiring at just the wrong time, you’ll know you have income protection.

If you buy a inflation-adjusted immediate annuity, you’re done with your investment decisions regarding the money you spend on the annuity. Your payout is now locked in — and your retirement paycheck won’t be adjusted for changes in capital markets.

Many conservative women investors like the idea of an annuity because they like the certainty of an income stream over their life expectancy or their beneficiary in the case of a joint annuity. Annuities offer a measure of protection against market downturns, may provide a guaranteed investment return, and grow tax-sheltered until you withdraw the money.

Women should live confidently when it comes to money know-how because being strong savers, future planners and organizers comes pretty easily to the female being. So be strong, be confident, and be financially sound because you are informed, involved and intelligent knowing annuities is the best investment tool for safe and secure retirement income.

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Tuesday, September 30th, 2014 Wealth Accumulation, Wealth Management

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