Personal Finance

4 ways women can prepare for early retirement.

New York Life | March 15, 2018


It's a sobering statistic: 4 in 10 American women plan to retire at 70 or later, or don’t plan to retire at all, with the majority considering part-time employment during retirement.1  What’s more, an unexpected early retirement can create major challenges for women if they're not prepared.

Here are four strategies to help:

1. Have your working spouse contribute to a spousal IRA.
A spousal IRA allows a working spouse to contribute to an IRA in the name of their nonworking spouse with no or very little income. As long as the working spouse has enough earned income, they can contribute up to $6,500 (if 49 or younger) and up to $7,500 if age 50 or older.2

2. Delay Social Security benefits.
While it's tempting to collect Social Security benefits early, waiting until you turn 70 means you can boost your retirement income significantly.3 If you retire earlier than the current retirement age of 62 you will lose 30% of your benefits. However, if you wait until age 70 to tap into your Social Security benefits, your retirement benefits would be 76% higher, adjusted for inflation, than if you retired at age 62.4

3. Find work-from-home positions.

Another way to prepare for an unexpected early retirement is to look for work-from-home positions to bolster your income and balance caregiving responsibilities. More than 75% of caregivers in America are women, according to the Family Caregiver Alliance.5 Working from home allows people to balance caregiving duties with a career without completely sacrificing an income and retirement savings.

4. Work with a financial professional who gets you.
Finally, it's important to find a financial professional who understands your specific, long-term financial needs. Women tend to have a more conservative investing style than men and are less likely to focus on building wealth.6  Consulting with a financial professional who works with you to prepare for retirement according to your unique situation, including your risk tolerance and time horizon, could help you formulate a plan in case you have to retire early.

Bottom line

The usual wisdom about retirement planning — participating in an employer's 401(k) plan, maximizing contributions as early as possible, and taking advantage of employer matching — are still vital to building wealth for retirement. However, the specific strategies described above can help women retain stronger financial security if retirement arrives earlier than planned.

 See more articles about retirement planning here.


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Media contact

Sara Sefcovic
New York Life Insurance Company
(212) 576-4499