Rock Island, IL, Aug. 29, 2017 (GLOBE NEWSWIRE) -- Women work hard and their money should work harder — no matter what their age or life stage. “Whether you are just entering the workforce or getting closer to retirement, it’s up to every woman to ensure she has a secure financial future,” advises Cynthia Tidwell, President/CEO of Royal Neighbors of America, one of the nation’s largest women-led life insurers. “Because many women, over our lifetimes, tend to go in and out of the workforce to care for family or may even earn less overall, we are more likely to be poorer as we age — essentially living longer on smaller incomes.”
In fact, a 2016 analysis by the National Institute on Retirement Security (NIRS) found that women are far more likely than men to face financial hardship and face impoverishment in retirement. The NIRS also found that across all age groups, women have substantially less income in retirement than men. For women age 65 and older, the data indicate that their typical income is 25 percent lower than men.[1]
Ms. Tidwell offers suggestions to help women and their families protect their financial future at every major life stage:
Stage 1: Early career, possibly marriage and children
As you enter the workforce, you may be living paycheck to paycheck, but start thinking long-term, especially for married and single mothers raising children.
- Identify how you spend money. Prepare a budget and stick to it.
- Eliminate debt. Pay off student loans and credit card debt as soon as possible. If you must borrow, do so for things that provide long-term value.
- Establish a saving pattern and set goals. If possible, use direct deposit for your paycheck and send a portion to your savings account through a recurring automatic transfer. Having a tangible goal, such as buying a house or a new car will motivate and discipline you to save.
- Put aside three months of rent and living expenses for emergencies.
- Take advantage of your employee benefits. If your employer offers a 401(k), begin contributing and increase your contribution by 1% every year or each time you get a raise or promotion.
- Make sure you have adequate life insurance. You may have group insurance with your employer but that may not be enough. Consider looking into other options.
Stage 2: Peak earning power, children, college plans
At this stage, income is rising, as are expenses. Children, larger cars, and homes can easily consume your income. Now is the time when financial decisions have the greatest impact on the lifestyle you want during your retirement. By now, you have accumulated some savings and learned to make sound financial choices.
- Address college costs. Fill out the federal FAFSA form (Free Application for Financial Student Aid) to determine eligibility and consider lower-cost community college or non-private college options. If you still need some financial help, carefully check out various loan options.
- Take full advantage of your employer’s retirement plans. Add the maximum to your employer’s 401(k) plan.
- Invest wisely using options that fit your comfort level. You may want to contact a qualified financial advisor to help you make the right choices.
- Ensure your insurance protection has kept pace with your needs. Having adequate life insurance is important to your family. Financial professionals suggest that a person should have an average of seven to 10 times her/his annual salary in life insurance to serve as replacement income.
- Start to plan for retirement so you don't outlive your money, and to ensure that your wishes (medical, financial, and custodial) are carried out.
Stage 3: Retirement, empty nest, grandchildren
Although many people are opting to continue working past the typical retirement age, you can see it on your horizon! After years of hard work, it’s now time to spoil your grandchildren, travel, and look back at what you’ve accomplished.
- Review your medical insurance. We are living longer and medical costs are rising. Health savings accounts, Medicare, Medicaid, and private health insurance will be important.
- Consider permanent life insurance coverage that will help you protect your loved ones from unexpected expenses upon your death.
- Continue to monitor your investments carefully and know what to expect from Social Security, your 401(k) plan, pension, and other investment accounts.
- Remember that by age 70 ½ you are required to take minimum distributions from your traditional 401(k) plan. Not withdrawing can cost you penalties on the amount you should have withdrawn.
About Royal Neighbors
Royal Neighbors of America, one of the nation’s largest women-led life insurers, empowers women to meet the needs of their families with annuities and life insurance products such as whole life, term, simplified issue, and universal life. Royal Neighbors was founded in 1895 and is headquartered in Rock Island, IL, with a branch office in Mesa, AZ. For more information, visit www.royalneighbors.org or call (800) 627-4762.
[1] 2016, National Institute on Retirement Security. “Women More Impoverished in Retirement.” Retrieved from: http://www.nirsonline.org/index.php?option=content&task=view&id=913. If you cannot access this article on-line, you may call (309) 732-8376 to request a copy.
W2017-4; Rev. 8-2017
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