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Retirement Planning Tips for Single Women

Retirement Planning Tips for Single Women

February 17, 2022

Women who are planning to retire solo may find saving for retirement a bit more challenging than men. This is due in large part to the historic (and continued) disparity in salaries between men and women. Today many companies are working to equalize their man-to-woman pay ranges. But this doesn’t help the fact that over the past few decades, woman with lower salaries obviously have not been able to sock away as much for retirement as their male counterparts. With that in mind, this article provides retirement planning tips for single women that have the potential to help you save enough to retire. Because, as a woman retiring alone, you’ve only got one income to count on, so you must prepare for that.

How Single Women Can Maximize Retirement Savings

1. Open a retirement account now. If you haven’t established a retirement plan yet, it is important to do so to begin accumulating tax-advantaged savings in the account. If your employer sponsors any type of IRA or 401(k), start making contributions as soon as you can. If possible, designate that your contributions come directly out of your paycheck and into the account. This makes contributing easy, and you’ll barely miss the money if you designate a bit from each paycheck.

Note: If your employer does not offer retirement benefits, you can open and contribute to individual traditional and Roth IRAs. If you own a small business or even a side business, you can use SIMPLE and SEP IRAs and/or a solo 401(k) to save for retirement. Your financial advisor can help you determine which account you’re eligible for, which is best for your situation, and help you determine how to begin maximizing your annual contributions in compliance with IRS contribution limits.

2. Take advantage of employer matching contributions. If your employer does offer a retirement plan, they may also offer matching contributions—but only if you are making contributions to your own plan. Employer matches can help you grow funds in the account, which can be significant as time goes on. Individual plans for small business owners mentioned above (solo 401(k)s and SIMPLE IRAs) also have provisions where you can make contributions as both an employee and an employer. Your CPA can help you determine how to contribute as each, which, again has a significant impact on your ability to save for retirement.

3. Incorporate retirement planning into your overall financial plan.Retirement planning is crucial, but many people don’t understand how it falls into their financial plan. Sensible and prudent financial planning helps you create wealth and manage your money today, and in doing so helps you find ways to save and support yourself in your golden years. Your financial plan includes budgeting for expenses in retirement and investing strategies that can potentially help facilitate the growth of the income you need to retire in comfort.

4. Purchase a long-term health care policy. Long-term health care insurance can be a bit expensive, depending on when you purchase the policy. However, if the unfortunate need arises that you need this type of care, your policy will make payments towards qualified expenses. This means you won’t have to dip into your actual retirement income for these costs.

5. Consider Opening a Health Savings Account (HSA)

HSAs are great accounts that allow you to save tax-sheltered funds to pay for qualified health care costs now and in retirement. There are certain rules and limitations as to how you can spend these funds. For example, if you use funds for anything other than qualified health care expenses as defined by the IRS, you’ll pay taxes and penalties on those misused funds. But, once you reach the age of 65, you can use any leftover funds your HSA for any reason—not just for health care costs—penalty free! These leftover funds, especially if you’ve accumulated a lot in your HSA over the years, can significantly supplement your income resources in retirement.

6. Delay Taking Social Security Benefits as Long as You Can

It’s essential to understand when to (and not to) take your Social Security benefits. First, if you retire and begin taking your Social Security benefits before you reach full retirement age, this has a negative impact on your overall monthly benefit amount moving forward. In other words, the amount you’re entitled to at full retirement age is larger than the amount you’ll receive if you start those benefits earlier—and your benefit amount is not readjusted when you hit full retirement age. It remains to be paid out at the lower amount you began receiving when you decided to withdraw your benefits early.

7. Take on a part-time job after you retire. Yes! You can do this! And many retirees work in their retirement years to keep themselves busy and connected. Check out some jobs for retirees in our recent article on the subject. The extra income can be used to splurge on yourself, for travel, or any other purpose. These extra funds also keep you from dipping into your actual retirement plan income. You can choose a fun and easy place of employment, or you can possibly continue working I your career field of expertise. It’s up to you, depending on the responsibilities and money you want working in retirement.

Final Thoughts from Pantheon Wealth Planning

Hopefully these retirement planning tips for single women have given you hope and inspiration if you feel you’re a bit behind in saving. There are strategies you can implement now and in retirement that can help single women catch up, save, and plan for the successful retirement they desire.