Guest Opinion: What women need (for retirement)

Retirement planning is even more crucial for women than for men. Although most women are married, 85 percent outlive their husbands and are alone during their last years.

Five of eight women rely on a husband’s work records to receive their Social Security benefits. For almost three of eight, those benefits represent 90 percent of their total income. . And elderly women are twice as likely to be living in poverty as elderly men.

The problem begins early for most families. Many frugal and hardworking parents sacrifice to give their children the comforts that money can buy. This psychology is especially true for daughters, who are often protected from the stresses of money. But daughters need a safe way to learn the lessons of irresponsibility. As early as possible daughters should be given the slice of the family’s budget that most directly affects them. By the time they are teenagers, they could be handling much of their own money. In other words, they need a safe way to learn the lessons of irresponsibility.

A teenage budget offers financial training wheels. Only if teenage daughters are given money for clothes can they learn the trade-offs between expensive outfits and other spending choices. Remember, not having sufficient money for everything you want provides a financial lesson that cannot be learned any other way. By giving your daughter enough money for all her wants, you’re actually depriving her of future financial satisfaction and stability.

Parents are apt to require their sons to take a first job and protect their daughters from the working world. But by age 14 daughters should be working and funding their Roth IRA accounts. If you want to help, offer to match whatever your daughter earns so she can put your contribution into her Roth and still have spending money.

Every seven years a woman waits to start funding her retirement halves the amount of money she can save. Helping your daughter add $2,000 annually to her Roth IRA for the years between age 14 and 19 actually is a better choice than starting her at age 20 and funding her account for the rest of her life.

From age 18 to 35, women need to take full ownership of their financial future. Often women leave the workplace completely to raise a family. Yet because women generally live longer and earn less, they cannot leave their retirement planning to later in life. A loving husband makes sure his wife’s retirement isn’t sacrificed to his career and the children’s needs.

My advice to all women: Make your retirement a priority. You may be more concerned for your family’s needs than for your own safety. Just as you must do in an airplane emergency, put on your own oxygen mask first so you’ll be able to help those around you.

Fund your retirement even if you don’t work. Unemployed spouses can still fund their retirement through traditional or Roth IRA accounts or simply by savings in a taxable portfolio.

Don’t guess at the amounts you should be saving. Know what goal you are trying to achieve. Automating your contribution to an employer-defined contribution plan is easy. If you aren’t employed, you can still automate a taxable savings plan. Most brokers offer a link between your investment account and your checking account and also an automatic transfer between the two. It’s a painless way to move money each month into your retirement or savings account.

Save and invest as little as $100 a month for 46 years earning 10%, and you can retire with a million dollars. And $500 a month grows to an astounding $5 million. Those gains can only happen if you start saving while you are young. If you are beginning later in life, you will have to save and invest more each month.
Older married women entering retirement should encourage a higher earning husband to delay taking Social Security.  Too many men take their pensions and Social Security as early as possible leaving a poverty benefit to their spouses. Each year that a higher earning husband can delay claiming Social Security will increase the benefit that a widow will inherit for the rest of her life.

It is never too late to take ownership of your financial plan. Financial success in retirement is found in knowledge and the experience that comes from living by a disciplined savings plan.

David John Marotta is President of Marotta Wealth Management, Inc. of Charlottesville.  Matthew Illian is a wealth manager at the firm’s Richmond office.