2. There's also a statistically good chance that you'll outlive your spouse. Women, on average, outlive their spouses by about seven years, according to the National Center for Health Statistics. If investing hasn't always been a priority, you should start learning to make it one now.
3. Pay yourself first. By investing systematically over a period of time, instead of paying monthly bills first and then saving whatever is left, you will be surprised how fast your nest egg can grow.
4. Fund your 401(k) or other employer-sponsored program to the maximum. You can build up a good portion of your retirement savings if you contribute as much as you are allowed to into deferred-income plans such as a 401(k). Not only will you reduce your current taxable income, but the tax-deferred compounding feature of these plans allows you to accumulate more than you would in a comparable account that taxes earnings each year.
5. Choose an individual retirement account that's right for you. Compare the projected results of contributing to different types of IRAs and of transferring assets from a traditional IRA to a Roth IRA.
6. Before you switch jobs, check your complete benefits package and the portability and vesting rules of your retirement plan. The U.S. Bureau of Labor Statistics reports that, on average, working women older than age 25 switch jobs every 4.8 years. This job-change frequency often prohibits the growth of retirement plans because vesting requirements are often set at five years.
7. Check on your Social Security benefits. The Social Security Administration reports that 66 percent of retirees rely on Social Security for half or more of their income, with the average monthly payment for women totaling $601. Clearly, Social Security should be thought of as a supplementary income during retirement and not a main source of funds.
8. Beware of being overly conservative in your investments. While there is a correlation between your age and the amount of risk you should assume when investing, being too conservative could seriously erode the value of a retirement account that you may need to rely on for 30 years or more. That's why you should think of retirement as a long-term investment and consider keeping a significant portion of your portfolio invested in stocks as long as possible.
9. Consider long-term-care health insurance. You can't afford to ignore this important insurance need when you consider that the cost of spending a year in a nursing home could run $60,000 or more, according to the Health Insurance Association of America, and could easily deplete your entire retirement reserve.
10. Don't leave everything to Uncle Sam. You owe it to your heirs to establish an appropriate estate plan. Without proper planning, estate taxes (which may range from 37 percent to 60 percent), plus state taxes and income taxes on retirement plan distributions, could reduce your estate by more than 75 percent (if the majority of your assets are in qualified plans and individual retirement accounts). Essentially, your heirs may receive only a fraction of all you've worked so hard to accumulate. SBN
Robert K. Cargin is a financial consultant with Smith Barney's Dublin office.