Saving for retirement remains one of the most important financial goals
for both men and women. While saving for retirement is a huge endeavor
for everyone, women face a variety of unique challenges and obstacles that
should be taken into account in their long-term planning.

First of all, and perhaps most importantly, women, on average, live longer
then men. Therefore, they will simply need more money during retirement
then men. According to a July 2005 report on www.msn.com, women at age 65
are expected to live another 19.5 years, while men are expected to live
16.6 year after age 65. But according to the same MSN report the
demographers predict that many women alive today will live into their
90's. This means many women will need to be prepared financially and
emotionally for a retirement lasting, in some cases, over 30 years.

Another challenge women face is that they typically have fewer years in
the workforce. According to the Social Security Administration, the
average man retiring in 2000 had 44 years of working under his belt,
however the average woman had only 32. This is because women are more
likely than men to take time off from work to have and raise children and
sometimes interrupt their careers to care for aging parents.

Work interruptions have significant financial consequences. For instance,
women's contributions to Social Security cease when unemployed,
ultimately reducing the Social Security benefit when they
retire. According to the Social Security Administration the average
Social Security benefit check for women was $774 per month compared to
$1008 for men.

Work interruptions can also make it more difficult for women to compete
for promotions and salary raises. For that reason, and others,
women's annual salaries are, on average, approximately 75 percent of
men's. Although the wage gap has been decreasing over the last few
years, the median income for full-time working women was $30,420 per year
in 2004, compared to $40,136 for men, according to the July 2005 MSN report.

Due to lower earnings and fewer years working, women are less likely to be
saving toward their retirement then men. According to the 2005 Retirement
Confidence Survey from the Employee Benefit Research Institute, 59 percent
of women are currently saving toward retirement compared to 65 percent of
men. The same study shows that only 36 percent of women participate in
workplace retirement plans, such as a 401(k)s, as compared to 48 percent
of men.

Yet another challenge is that women tend to be more conservative investors
then men. A 2004 study called the "Financial Gender Gap" found
that women have a lower risk tolerance and therefore tend to be more
conservative with their investments. Although there is a place for
conservative investments in most portfolios, investing too conservatively
(across the board) can lead to decreased savings and diminished retirement
investments.

Here are some financial tips specifically geared towards women to help
them better prepare for their retirement:

Make saving a priority:

Some women get sidetracked when balancing many financial obligations,
caring first for their family, such as their children or aging
parents. They should remember to focus on taking care of themselves and
not let saving for their own retirement slide.

Invest more:

Women should actually consider investing more than their male counterparts
to account for their longer lifespan and smaller earnings. Women must
take into consideration both their risk tolerance and time - horizon so they
can invest appropriately toward their goals.

Contribute to Retirement Plans:

If eligible and your employer provides a retirement savings plan, such as
a 401(k), do not delay signing up. Start as soon as you are eligible and
contribute as much as you can, especially if your company has a matching
program. You may want to augment your 401(k) savings by contributing to
an Individual Retirement Accounts (IRA). An IRA is also a good option if
your company does not offer any retirement savings accounts.

Save, even if you are not working:

If you have taken or are planning to take time off from work to raise kids
or care for aging/ill family members, try to continue to save money in
your IRA accounts. Married people filing jointly are able to make a
deductible IRA contribution based on their earnings.

Delay your retirement:

If you are nearing retirement and feel that you are not financially
prepared, you may want to consider delaying your retirement. By delaying
your retirement, you continue to earn income and postpone taking withdraws
from your retirement savings which allows your assets to continue to
compound and grow. Delaying will give you more time to save and contribute
to your Social Security benefit. In fact, for each year you delay beyond
65 years old, your Social Security benefit will increase 8 percent,
according to recent financial report on www.ivillage.com.

Seek help:

Meet with a qualified financial advisor who can help you create a
personalized financial plan which includes retirement savings and options
designed specifically for your unique needs and challenges.

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This information is provided for informational purposes only. The
information is intended to be generic in nature and should not be applied
or relied upon in any particular situation without the advice of your tax,
legal and/or your financial advisor. The views expressed may not be
suitable for every situation.

Ameriprise Financial Services, Inc., Member NASD, part of Ameriprise Financial, Inc. © 2006 Ameriprise Financial, Inc. All rights reserved.

Labels: financial planning, retirement