Women face special issues when planning retirement

Whether you expect to spend your retirement improving your golf handicap, rocking your grandchildren or circling the globe, careful planning is essential for a financially secure future. And planning is particularly vital for women because of the special challenges they face. For example:

* Women live longer than men — an average of seven years — so their retirement funds have to last longer.

* Women typically earn about 25 percent less than men. This means their pensions and Social Security checks often are smaller, and they have less money available to invest in savings.

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* Women often spend fewer years in the workforce because they take time out to bear and care for children and to care for aging parents.

What steps can women take to meet these “gender” challenges and better insure their financial security?

Take stock of family finances. If you don’t handle the finances, your first step is to learn how much income you have, what you own, what you owe and where the financial records are kept. Make sure you understand your own pension plan. If you’re married, learn what benefits — including survivor benefits — your husband’s plan provides. Find out about Social Security benefits at www.ssa.gov. You also may need to investigate what effect divorce and remarriage have on your benefits.

Arm yourself with information. Financial planning information from a female perspective abounds on the Internet and in bookstores. Many Internet sites offer retirement calculators to help you develop an investment plan. Get started by checking out www.msmoney.com or www.wife.org, the Web site of the Women’s Institute for Financial Education. Books such as “Smart Women Finish Rich: 7 Steps to Achieving Financial Security and Funding Your Dreams” by David Bach and “When Baby Boom Women Retire” by Nancy Dailey offer specific investment strategies for women.

Find a financial adviser. Seek out an adviser you can trust — an experienced specialist who will work one-on-one with you over the long term and who understands the special retirement needs and investment patterns of women. For example, women typically are more conservative with their investments than men, and fewer choose to invest in stocks. A financial adviser may help you develop a more appropriate strategy that balances investments in stocks, bonds and cash to maximize returns and minimize risk. And remember, the less money you have to invest, the more important it is that you get sound advice. Many financial services companies offer free consultations for people beginning their retirement planning.

Set goals. Decide when you want to retire and how much you’ll need to support the lifestyle you choose. The old rule of thumb was that you needed 60 to 75 percent of your pre-retirement income. Today’s retirees are active and many actually increase their spending when they retire. Keep in mind that you may be retired for 30 years or more and, because women live up to 20 percent longer than men, some advisers suggest that your nest egg should be 20 percent larger.

Start now. There’s no time like the present to begin saving — even in today’s volatile market. The sooner you start to save, the faster your money grows. For example, if you begin today saving $20 a week in a retirement account that earns 10 percent a year compounded, in 25 years you will have $108,000. If you wait five years to begin saving, you will have about $63,000 – or $45,000 less. This is a hypothetical example and does not reflect the investment in any specific security.

Commit to a regular savings plan. Experts recommend that you save at least 10 percent of your income. If you can’t manage 10 percent now, start by saving 1 percent or 2 percent and increase the percentage every year. Take a close look at the small bits of cash you spend each day and record every penny you spend for a few weeks. You may find it’s not the mortgage or car note that stands between you and a financially secure future — it’s daily lattés, magazines and movie rentals. If you make your own coffee, for example, you might add nearly $1,100 a year to your retirement account — and save a few calories as a bonus. Make sure you take full advantage of any 401(k) matching contributions from your employer. If you leave your job to care for children or parents, continue saving by contributing to an individual or a spousal IRA.

Get involved. For single women, retirement planning is all up to you. If you’re married, share the decision-making with your husband. You owe it to yourself to help shape your own financial future.Lianne Shepherd is vice president and manager of premier banking at Wells Fargo Bank in Boulder.