Tuesday, December 15, 2015

The Easiest Way of Generating Retirement Income as a Woman

According to research, most women save less amounts of money before they retire compared to men. The reasons behind this include earning less than men, taking time off to rear children as well as spending more time with their elderly loved ones. To add to that, some women don’t consider saving for their retirement until later in life, but, unfortunately, they wait till it’s too late.

There are various ways through which women can reverse this scenario and create enough income for their post-retirement lives. On top of pooling talents, resources and ideas with your fellow women, you can consider the following effective ways:

1. Reorganize your budget

Once you put the idea of saving in your mind, ponder reworking your budget especially your spending. You need to do away with non-essential spending such as impulse buying and any other unnecessary outlays. Take responsibility for your level of affluence after retirement by recognizing your vital role in your retirement planning process.

2. Learn finance basics

Some women think that finance as a discipline is a thing for men, but that’s not the case. As a woman, you should take time to educate yourself about finance issues from the internet and the many books available in the market. A financial consultant can also be resourceful in helping you come up with a suitable saving plan.

3. Work extra time

If you must spend that extra buck, then why don’t you consider working two jobs? You will get an extra income to spend on your miscellaneous needs. As you work on the additional time, you become psychologically prepared for retirement, and hence more active.

4. Pay off unproductive debt

To stay on the safe side, pay your credit card bills fully every month. And if that’s too much, try to pay more than just the minimum.

5. Create a home-based business

If you have to be at home, come up with a business idea that is feasible while at home. If your hobby can be monetized, then leverage on that. Some women make jewelry, crafts and other creative pieces that can generate income.

6. Plan ahead of time the lifestyle you want after you retire

Before you set your retirement date, ensure that you have the right amount of money at hand. After that, you can think of the kind of life you will want to live, where you would like to live and any other details. To be certain that your retirement plan will work; you may want to seek the assistance of a financial consultant.

If you are formally employed, there are chances that your employer offers a 401 (k) plan. This retirement benefits plan ensures that you have enough money to take care of yourself once you retire. The best way of getting your money upon retirement is through annuities that are sold by financial institutions like banks as well as brokerage firms. 

Unfortunately, due to lack of knowledge, a survey by TIAA-CREF found that only 14 percent of the 84 percent of Americans who wanted a guaranteed retirement monthly income had taken up an annuity-payment policy.

An annuity is an agreement between an individual and an insurance company, where the contract entails the person giving up the cash to a guaranteed regular income. Having an annuity plan gives you peace of mind because of the following reasons:

· Income boost

Annuities provide you with a reliable source of lifetime earnings. By putting some of your savings into an immediate annuity scheme, you get more income than the Social Security can provide.

· Steady lifetime payout

The insurance company you invest in ensures that you get a monthly stream of income. You have your principal investment and the dividends of your investment to depend on even if you outlive your stated life expectancy.

The savings that you generate out of a 401K plan determine the amount of cash you can invest in an annuity and in turn convert into a monthly pension. 401K plans help people maximize on their savings in the following ways:

  • With a Roth 401K, you contribute to your savings plan in terms of after-tax dollars. This means that you will withdraw your money free of tax and thus have enough to invest with.
  • A traditional 401K is usually pre-tax, meaning that you won't have to pay taxes for your account as your savings grow. When withdrawing your savings after retirement, you will pay taxes at the ordinary income-tax rate and of course at a lowered rate since you will have hit 65 years and above.
  • Some employers offer to match contributions made to 401K plans thereby increasing your overall savings.

About the author:

Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning company based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last 10 years has turned his focus to self-directed accounts and alternative investments. 

Rick regularly posts helpful tips and articles on his blog at SD Retirement as well as MoneyForLunch, Biggerpocket, SocialMediaToday, WealthManagement, SeekingAplha, and NuWireInvestor. If you need help and guidance with traditional or alternative investments, email him at rick@sdretirementplans.com or visit www.sdretirementplans.com.


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