Planning for later in life can be confusing and difficult no matter who you are. Finding ways to make sure that you will be able to take care of yourself—financially and otherwise—isn’t easy. However, when it comes to retirement and estate planning, woman face their very own set of problems, according to a recent article in the Courier-Journal.
According to Debra Whitman, an AARP executive vice president for policy, strategy and international affairs, “Women face the reality of longer lives with fewer financial resources to fall back on. They are paid less than men on average – 77 cents on the dollar, which can add up to half a million dollars over a lifetime.”
On top of making less than men, you also have to take into account than many women will drop out of the workforce, at least temporarily, in order to raise children. Making less money and not working as much as their male counterparts can make it very difficult for women to build up a retirement savings account.
Another issue facing women is their tendency to invest more conservatively. This may actually sound positive, because conservative investments mean money is “safe.” But without taking some risks, women have trouble capturing the return on investment they need in order to retire. “I have faced clients who have all their assets in cash. It’s important not to be overly invested in cash just because its safe. Recently, the market has been strong. It’s important as you head towards retirement to capture some of those gains,” says Derek Gabrielsen, a wealth adviser.
Women need to be aware of these challenges in order to figure out ways to overcome them. To start with, own these challenges and make a plan. Create an all-inclusive retirement plan that looks at more than just finances. For example, consider how you will pay for health care costs or extended care. (Because women tend to live longer, you will likely have more health care expenses.) You might think about long-term care insurance. You should also create powers of attorney—both health care and financial—to make sure that you will be protected if the worst happens and you can’t take care of yourself.
It’s great to sit down and develop a plan on your own, but the truth is that you’ll probably need the help of a professional to execute that plan (to make sure it is both realistic and legal). Don’t hesitate to get in touch with an estate planning lawyer and financial planner for help.