Planning for retirement as a woman: The full breakdown

The most important thing women can do to defend themselves from poverty late in life is to start planning and saving now.

Video Transcript

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- Life goes by quickly, and before you know it, retirement is upon you. Too many women are ill-prepared financially for retirement and find themselves living at the poverty level. The most important thing women can do to defend themselves from poverty late in life is to start planning and saving now.

The gender gap is a well-known issue. It means that women have always been paid, on average, about 22% less than men. This carries over into their retirement. Lower earnings yield lower contributions to social security, lower pensions, and lower 401(k) accounts.

Women typically earn 1/3 less than men during their careers. This, too, has a devastating effect on their income after retirement. A woman is more likely to experience a career interruption to raise children or care for aging parents. And since women outlive men, their less-than-adequate savings have to last even longer than a man's might.

The place to call home may need to change as your financial picture changes entering retirement. You may choose to shed the mortgage and taxes altogether and rent, which is generally cheaper. You'll need to factor in insurance.

Beyond burial insurance, you'll need to ask yourself if you need life insurance as most retirees don't. Most retirees no longer have company health benefits and go on Medicare, but it isn't free. Unlike most private insurance plans that have copayments, Medicare has coinsurance, which is much more difficult to budget. As a result, many retirees choose to purchase secondary insurance, which will generally pay for the entire coinsurance bill.

You may want to look into long-term care insurance that provides benefits for nursing homes and/or at home care when you become unable to live independently. Long-term care is expensive, and so are premiums, which can go to the thousands per year. Almost all workers pay into the Social Security System through payroll tax deductions or by paying self employment taxes. To be eligible for benefits, you must have at least 40 quarters or about 10 years worth of Social Security qualified wages or self-employment income. Statement financially fit, friends.