The Importance of Financial Protection for Senior Women
You likely have great plans for your senior years and have saved money to fund those plans. Many people travel or take this opportunity to do the things they've always wished they had time to do — pick up a hobby, take some classes, go back for a degree. Others look forward to relaxing and spending time with their family and friends.
Will You Have Enough?
What many people neglect to plan for is the possibility that they might outlive their savings, which can happen for many reasons. An extended retirement, caused either by early retirement or living longer than you ever expected to, can be a reason. So can inflation, which means that the buying power of your money will diminish over time.
Women, in particular, have a lot of catching up to do when it comes to planning for retirement. According to the 2008 WISER (The Women’s Institute For A Secure Retirement) brochure Don’t Run With Your Retirement Money1, the average future life expectancy for a woman at retirement age is greater than for a man at the same age. So women on average need to secure more money and more years of guaranteed income to finance their retirement.
But conversely, according to 2009 United States Department of Labor article Women and Retirement Savings2, women are at a disadvantage when it comes to building that much-needed retirement income. “Women are more likely to work in part-time jobs that don't qualify for a retirement plan. And working women are more likely than men to interrupt their careers to take care of family members. Therefore, they work fewer years and contribute less toward their retirement, resulting in lower lifetime savings,” cautions the report.
As wife.org (Women’s Institute for Financial Education) summed it up so succinctly in its 2008 piece Why Women Need Retirement Planning More Than Men Do3, “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.”
What You Can Do
Fortunately, there are some basic strategies you can employ to help ensure that your golden years will stay that way. First of all, it's important to find ways to maximize returns on money in order to keep pace with inflation. It's also important to be comfortable with the risk level you are willing to assume on your money. Lastly, it's a good idea to make sure that you are financially protected in the event of illness, and that you have an estate plan in place.
Consider Lifetime Income Annuities
Lifetime Income Annuities4 are one of the best ways to receive income for life and peace of mind. In his 2008 essay Lifetime Income for Women: A Financial Economist’s Perspective5, David F. Babbel, Fellow at Wharton Financial Institutions Center and Professor of Insurance and Finance at The Wharton School, which was co-sponsored by New York Life, concludes that “Leading economists from all over the world agree on the importance of lifetime income annuities and their central role in retirement planning. And today, with the elimination en masse of defined benefit pensions, the annuitization choice is even more important.”
In his essay, Babbel writes that lifetime income annuities may not be the perfect financial instrument for retirement, but when compared under the rigorous analytical apparatus of economic science to other available choices for retirement income, where risks and returns are carefully balanced, they dominate anything else for most situations. When supplemented with fixed income investments and equities, it is the best way we have now to provide for retirement. There is no other way to do this without spending much more money, or incurring a whole lot more risk—coupled with some very good luck. He stresses that lifetime income annuities are an especially attractive option for women, who have greater life expectancies and may benefit from them longer.
You Can Make it Work
As you begin to think about how best to make your retirement savings work for you, it is important that you speak to competent legal, financial and insurance professionals. You've spent many years working and saving toward your retirement and have succeeded despite the pressures of being a woman. Now is the time to complete the circle and take control of your own future. With proper planning, these may truly be your "golden years."
- Wiser Brochure: http://www.wiserwomen.org/pdf_files/dontrun.pdf
- The Lifetime Income Annuity is issued by New York Life Insurance and Annuity Corporation, a wholly-owned subsidiary of New York Life Insurance Company. Guarantee is backed by the claims-paying ability of the issuer.
- Babbel study: http://fic.wharton.upenn.edu/fic/Policy%20page/RetirementIncome-Women.pdf
This material is being provided for informational purposes only. Neither New York Life nor its agents provide legal, tax or accounting advice. Please contact your own advisors for legal, tax and accounting advice.
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This material is being provided for informational purposes only. Neither New York Life nor its agents provide legal, tax or accounting advice. Please contact your own advisers for legal, tax and accounting advice.
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