It's no secret. Americans are living longer than ever and could spend 30 years or longer in retirement. Sounds great, doesn't it? While you may be mentally prepared to kick back and enjoy life without work, are you financially equipped for a retirement that could last that long?
For women, preparing for retirement is no easy task. Cindy Hounsell, executive director of the Women's Institute for a Secure Retirement, warns, "Women are twice as likely as older men to become poor. Women have a lifetime of lower earnings, so their retirement income is lower, including pension benefits, 401(k) distributions, and Social Security payments." Consider these statistics:
In addition to lower earnings and lower retirement income, women face another challenge: Making the assets they do have last as long as they live. On average, women live five to seven years longer than men and, if married, are more likely to become widowed--another obstacle in achieving secure retirement.
According to the Center for Retirement Research at Boston College, non-married women are the most vulnerable in becoming poor in old age. However, even though married women tend to fare better financially in retirement than those who never marry or divorce, married women who depend on a spouse's retirement benefits suffer severe income decline after the husband's death: Social Security benefits are cut up to one half and income from a spouse's private pension benefit is either reduced or terminates.
Whatever your situation, there are steps you can take to secure your future. First, participate in any retirement savings plan available through your employer, such as a 401(k)-type plan, and then determine how much additional savings you can put aside for retirement.
When looking at additional retirement savings options, consider the annuity. An annuity is a financial product that allows you to save for your future on a tax-deferred basis and then provides you with a steady paycheck in retirement that you cannot outlive. It is a contract written by life insurance companies and sold by life insurers, as well as banks and brokerages. An annuity has certain benefits other retirement planning tools may not, including:
There are a variety of things to consider before purchasing an annuity including the different types, as well as purchasing and payout options. Talk to your financial planner, insurance agent, or company representative about what type of annuity may be right for your retirement portfolio.
Learn more about annuity basics in the brochure, The Individual Annuity: A Resource In Your Retirement, produced by the American Council of Life Insurers.
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