5 Ways Women Can Avoid Retirement Disasters

Every year at this time I look forward to celebrating International Women’s Day. For me, every day is an opportunity to honor and support women: I have built my life and practice as a Certified Financial Planner around helping women and their families live the lives they want.

I meet with clients at all stages of life and wealth building, but I often work with women in their 50s and 60s as they enter retirement. We like to focus on the positives that can come with this phase—starting a business or a second career, going to Disney World with the grandkids, or freeing up time to volunteer—but we also need to recognize and plan the pitfalls that can trip them up.

With that in mind, here are my tips for avoiding some common financial landmines as you move through your 50s, 60s, and beyond.

Watch out for the savings gap

By 2030, women will control two-thirds of the country’s wealth – but many are lagging behind when it comes to saving for retirement. One analysis found that women have 27% less saved than men, and according to the US Census, about 50% of women ages 55 to 66 have no personal retirement savings at all.

Read: Women’s retirement wealth could be improved with a little more planning

There are many reasons why women fall behind: they tend to invest less, are often paid less, and put others first, taking time out of the workforce to care for children and aging parents. In addition, women’s Social Security benefits are 80% of what men receive on average, and they have longer life spans – meaning women live longer on less.

This is hard to think about, but being aware of the gaps is good motivation to do what you can now to close them. One way is to monetize your money by investing. I often see clients with a case of “paralysis by analysis” – they are so afraid of making decisions about their money that they don’t do anything at all. But cash under a mattress does not appreciate. By working with a financial professional, these clients understand how putting money into an investment portfolio can help.

A common strategy to take advantage of specialized, tax-advantaged retirement savings vehicles like 401(k)s and IRAs. For those eligible, these accounts allow savers 50 and older to put away more than the annual catch-up contribution limit (for 2023, $7,500 over the $22,500 limit for 401(k)s and $1,000 over the $6,500 limit for IRAs).

Prepare for care

The chances are high that you are or may find yourself caring for an aging parent – ​​physically, financially or both. There are many questions to consider when evaluating the best way to help, while also thinking about your own financial security. How much help is needed? How do I balance my obligations with those of my siblings? Will my parents require short- or long-term care, and do they have long-term care (LTC) insurance to cover expenses?

Ideally, you would start planning before this type of care is required so that your parents qualify for LTC coverage, but that is not always realistic. No matter where you are in your planning, explore the full range of options – including 24-hour or part-time home care, Continuing Care Retirement Communities (CCRC) and nursing homes. Consult reliable sources, such as AARP, for information about care options. Understand what Medicaid and Medicare do and do not cover.

Although not easy, these are the responsibilities that come with this stage of life. The goal is to do what you can to help your parents age gracefully and provide the care they need. After all, they looked after us and it’s our time to return the favor.

Beware of scammers disguised as suitors

Most of us crave companionship, but it can be different as we get older. If your marriage ends due to death or divorce, it’s natural to want to find new love—but be careful where you meet them.

Unfortunately, widows and divorced mothers are prime targets for online romance scammers. These bad actors will charm their way into your life, but after they win your trust, they will steal more than just your heart. According to data from the Federal Trade Commission, people 60 and older lost $139 million to romance scams in 2020, up from $84 million in 2019. Unfortunately, I was married to a scammer once, so I know this all too well .

To protect your and your ex-spouse’s hard-earned savings, be vigilant about any new potential partners entering your life, especially online. If they start asking for gift cards, tugging at your heartstrings with stories about sick grandchildren, or otherwise trying to convince you to make changes to your financial accounts, cut off communication and stay away. You can also report suspected fraud to the FBI’s Internet Crime Complaint Center.

Read ‘get rich quick’ as ‘too good to be true’

Romance scammers aren’t the only ones preying on older women and their wallets. It usually goes like this: An acquaintance comes to you with an investment opportunity that has already made her a profit, and makes sweeping statements like “you can double your money in six months.” Even though your gut tells you something is wrong, you decide to give it a chance. Before you know it, your investment has been used to pay off a previous “investor” and you are part of the latest Ponzi scheme.

While a portfolio of carefully researched investments can help you achieve your financial goals over the long term, there are no get-rich-quick schemes that work. If someone approaches you with an opportunity that seems too good to be true, look for the signs: an unprofessional website, requests for a lot of personal information, few references to third-party custodians or government agencies, and a lack of information about mainstream financial websites .

Find your lawyer

Regardless of their life stage, I encourage all women to get a financial advocate: someone to bounce financial questions and ideas off of, hold you accountable, and help you stick to your plans. Friends and family usually offer good advice and have your best interests at heart, but personal feelings and privacy concerns can sometimes make these conversations complicated.

A professional, such as a financial advisor, certified financial planner, certified public accountant or attorney, can offer more objective guidance. It is important that financial professionals have an obligation to investigate all investment opportunities presented to them by their clients so that they can help sniff out anything suspicious.

Prioritize your financial life

Many of us put off thinking about money until a major life event forces us to do so. But you owe it to yourself to prioritize your financial life and your goals – not just on International Women’s Day, but every day. A little research and planning can help you avoid the pitfalls and enjoy the retirement you deserve.

Cary Carbonaro, CFP, is the Director of Women and Wealth for Advisors Capital Management.

The above content reflects the opinions of Advisors Capital Management, LLC and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of securities. There is no guarantee that the statements, opinions or forecasts made herein will prove to be correct. Past results may not be indicative of future results. Investing in securities involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.

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