The 40s are a big transitional stage for many women. Some women head back to work as their children get older and require less supervision, while others start their own businesses or begin to increase their responsibilities in established careers. Whatever the case, retirement investment planning should always be in the back of your mind as you make fiscal decisions for yourself and your family.
Evaluate Life Insurance Policies
According to a WISER Special Report from the Women’s Institute for a Secure Retirement, many women lack sufficient life insurance for themselves and their spouses. Since women live longer than men, on average, this is an especially important part of preparing for retirement.
If, for example, you’ve always gone with term life insurance in the past, it might be time to start considering permanent life insurance as you enter your 40s. Both you and your spouse should be covered so that, if the worst happens, neither of you will wind up financially devastated.
Overestimate Life Expectancy
Using outdated statistics for retirement investment planning is a big mistake, especially for women in their 40s. Both men and women are living much longer than they did in the past, so it is important to prepare for a long and healthy life beyond retirement age.
It is a huge mistake to forget about inflation during retirement investment planning. US News recommends Treasury Inflation-Protected Securities and other bonds, stock options, and real estate investments that will protect your financial future in light of inflation.
Vary Your Risk
According to the U.S. Department of Labor, women are more conservative than men when it comes to investment risk. Retirement investment planning requires a diverse strategy that incorporates different types of investments in your portfolio. Sticking only with low-risk investments means you will always add less to your savings.
Start a Retirement Plan
Some women in their 40s are employed part-time where no benefits are offered, are unemployed, or are self-employed. In any of these circumstances, you can still start retirement investment planning.
Entrepreneurial women, for example, might want to start a Simplified Employment Plan, which is ideal for self-employed workers. Don’t let your lack of full-time employment rob you of future financial security, whether you are married or single.
Start Accruing Assets
If you’ve always rented your home, start thinking about buying. A house is an excellent investment in your future, and you will be much better off financially if you own your home upon retirement. Women in their 40s should start getting rid of “bad debt,” such as credit cards and student loans, while making aggressive moves to pay off “good debt,” such as mortgages.
Work with a Financial Planner
It is always a benefit to have all the facts as you start retirement investment planning. For example, what percentage of your current income is needed to support you in retirement? Depending on your income level now, it could be anywhere from 60 to 95 percent, and knowing these numbers will help you strategize.
Consider social security benefits, your spouse’s retirement plan, any additional income you currently bring in, and your current investment strategy. If you give your financial planner or adviser all the facts, he or she can tell you what you need to create a stable financial future for yourself and your family.