3 Reasons Women Need to Plan Carefully for Social Security

Maurie Backman, The Motley Fool published this article recently and discussed why women need to plan carefully for social security.

Social Security often serves as a major income source for both male and female retirees. But those in the latter camp need to be even more strategic about those benefits. Here are three reasons why.

1. Women tend to live longer than men

The average 65-year-old man today can expect to live until age 84.3, says the Social Security Administration, while the average 65-year-old woman can expect to live until 86.7. That may not seem like such a large gap, but consider this: It’s estimated that 90% of women will eventually be responsible for their own finances down the line, in the absence of their long-term partners. As such, it’s especially critical that women maximize their Social Security benefits — because they’re likely to collect them for longer.

2. Women typically earn less than men

You’ll often hear that women’s earnings pale in comparison to men’s, and while you’ll see different statistics relating to the wage gap, as a general rule, females only earn about $0.78 to $0.82 for every dollar their similarly qualified male counterparts bring home. As such, they stand to collect less from Social Security, since benefits are calculated based on workers’ 35 highest years of earnings. Compounding the problem is that women are also more likely to take extended breaks from the workforce, often to raise children, and therefore frequently don’t have a full 35 years of work on record. When that happens, a $0 gets factored in for each missing year of work, thereby bringing those benefits down.

3. Women often have less retirement savings than men

Because women earn less than men and are also more likely to take time out of the workforce, they often struggle to set aside funds for the future. In fact, a study released last year found that women are saving only about half as much as their male counterparts. The result, therefore, is that women are more likely to rely heavily on Social Security in retirement to make up for their lower IRA or 401(k) balances.

Making the most of Social Security

Clearly, Social Security plays a critical role in women’s retirement. The good news in this regard is that women can take steps to get more money out of the program.

For one thing, filers who delay benefits past full retirement age get an 8% boost for each year they hold off on claiming them. That means a woman with a full retirement age of 67 could wait until 70 and grow her benefits by 24% — for life. (Delayed retirement credits that produce the aforementioned boost cease to accrue at 70, which is why delaying past that point isn’t necessary.)

Working longer achieves an additional goal that helps from a Social Security standpoint — filling in gaps for years spent away from the workforce. A woman with just 32 years of work on record, for example, could retire at 70 instead of 67 and add three more years to her work history for a total of 35.

Fighting for more money on the job can also work wonders for Social Security purposes, not to mention make it easier for women to save for retirement on their own. An estimated 56% of employees have never come out and asked for a raise, according to job site CareerBuilder, but of those who have, 66% got pay boosts. Researching salary data can help women approach those conversations more confidently, especially when they can prove that they’re statistically underpaid.

While Social Security isn’t designed to sustain retirees on its own, many women will wind up leaning heavily on those benefits down the line. By taking steps to get as much money as possible out of the program, women can reduce their likelihood of struggling financially during their golden years.

More From The Motley Fool

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Retirement investing tips to help you when market goes awry

By Tara Siegel Bernard The New York Times

You’ve heard it before: When the markets become erratic, or seem poised for a prolonged downturn, the best thing you can do is nothing at all.

The recent volatility in the stock market can make older investors feel vulnerable. Here are some strategies to make sure your money lasts as long as you do.

But if you are on the cusp of retirement — or, perhaps worse, newly retired — a turbulent stock market can make you feel particularly vulnerable.

While there is some validity to those feelings, it’s more productive to redirect any panic into prudence, which will help ensure your money lasts longer.

For older people invested in stocks, the performance of the market in the early years of your retirement can have a lasting effect on your portfolio, which will remain a dynamic entity for perhaps three more decades. If you have to start selling investments when they are worth less, you’ll have to sell more shares to get the cash you need — and the repercussions build on themselves.

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Women Have Retirement Complications

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Janet Bodner, an Editor-at-Large with Kiplinger’s Personal Finance, recently wrote an article that appeared in the Chicago Tribune about the difficulties that women face when it comes to achieving a secure retirement.  Here are several excerpts:

My daughter Claire recently sent me an e-mail recounting a conversation she overheard while having lunch at a restaurant.

A girl asked her mother how people pay for retirement. “Her mom said, ‘Well, there’s this thing called a pension, but that probably won’t be around when you’re older. And there’s Social Security, but that probably won’t be around, either,’” Claire told me.

“And that was it,” Claire said. “It made me sad because the mom clearly had no idea how one actually pays for retirement, and it was such a lackluster answer to a really good question. It seemed like a good time for her to tell her daughter that you need to save for retirement your entire life.”

Claire is right on two counts: Lackluster answers won’t help girls become financially savvy, nor will they help women achieve a secure retirement.

“Women face all the issues that men face, plus they have additional complicating factors,” says Larry Swedroe, co-author of “Your Complete Guide to a Successful & Secure Retirement.”

The life expectancy for women is longer than it is for men, but women tend to amass less in retirement savings because they often earn less over the course of their careers, are more likely to take time off for family responsibilities and tend to invest more conservatively.

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What Is a Reverse Mortgage and What Does It Mean to Me?

Recently Brian O’Connell published in The Street about what a Reverse Mortgage Does!

A reverse mortgage is an increasingly attractive proposition for older Americans who may be low on cash, need to supplement retirement income, and want to use their home equity to remain in the house they own.

Reverse mortgages are loans that enable U.S. homeowners over the age of 62 to cash in on the equity built up in their home, via a reverse mortgage lender.

That’s a tempting opportunity in an age where millions of U.S. seniors are struggling to save enough money for retirement. Data from Northwest Mutual shows that 67% of Americans believe they will outlive their retirement savings and 21% of American have saved zero dollars for retirement.

Even so, there are some risks involved in cutting a deal on a reverse mortgage (otherwise known as a home equity conversion mortgage.) Such mortgages are supervised by the U.S. Federal Housing Administration, an arm of the Department of Housing and Urban Development, so there is some level of regulatory scrutiny.

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Why Choose Long Beach Reverse Mortgage?

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Long Beach Reverse Mortgage is the best-in-class home equity conversion mortgage lender. We help you get all the reverse mortgage pros and cons to get you the most out of your loan.

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You’ve worked hard your entire life, saved for retirement, paid your mortgage month after month and built home equity. Long Beach Reverse Mortgage lets you use your home investment as tax-free* money to improve your retirement’s quality of life.

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Use your reverse mortgage loan proceeds to improve your retirement and enjoy it the way you want to. Pay off outstanding debt, manage expenses without worrying, supplement your retirement income and save funds for later. *Homeowner is responsible for property taxes, homeowners insurance, and maintenance of your property.


What Is A Reverse Mortgage?

A reverse mortgage is a loan that converts your home’s equity into cash for borrowers who are 62 years or older. The first thing we always ask a customer is it possible to sell the house and downsize? Secondly, can your family come to give you monthly money to supplement your income? At Long Beach Reverse Mortgage we want to make sure that a reverse mortgage is a right solution for you.

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