According to the National Center for Women and Retirement, 90 percent of all women will be solely responsible for their finances at some point of their lives.

Also consider that – with increasing longevity – you could face the challenges of:
Buying or selling a home
Starting a family
Changing careers
Retirement

Are you prepared for these possibilities?

Avoid Becoming a Bag Lady

“If one advances confidently in the direction of [her] dreams, and endeavors to live the life which [s]he has imagined, [s]he will meet with success unexpected in common hours.” – Henry David Thoreau.
Even though more women earned incomes topping $100,000 in the last decade, most women said they don’t feel financially secure and about half are worried they could become a “bag lady,” according to a new study conducted by Harris Interactive. It is true – women are more educated, more involved in financial decisions and control more of the wealth than ever before. Yet women still have chronic anxiety about finances.
This nonspecific fear of financial ruin and angst of losing financial footing is understandable but the reality is that in today’s world, no one is guaranteed a secure retirement. People can’t rely on Social Security anymore, male or female, but the fact that women outlive men exacerbates the level of financial insecurity for them. We may live as much as one-third of our life in retirement and it is important to plan well in order to enjoy a comfortable, soul-satisfying retirement that you have always envisioned.
Avoid Common Individual Retirement Account (IRA)
Owner Mistakes
As more “baby boomers” are retiring and rolling over large 401(k) and other retirement plans to IRAs, proper tax and estate planning for IRAs have become increasingly important.
There have been several major changes with IRA laws and taxation, including crucial changes made when the Pension Protection Act was signed into law August 17, 2006. The government will not notify you of these changes. It is your responsibility to know and understand how these changes will impact you and your loved ones. Otherwise, how do you know if you have enough income to last throughout your retirement? Additionally, how does your income situation change upon the death of your spouse?
If you do not do the proper planning, anywhere from 35 percent to 70 percent of your IRA can go toward paying income, estate and penalty taxes when you pass away. In order to prevent this from happening, the government has provided an avenue known as a stretch distribution strategy which allows you to pass your IRA down to your heirs and allows them to take distributions over their lifetime.
Something you should consider when planning for the distribution of your IRA to your heirs is using an IRA Inheritance Trust to control the distribution of your IRA assets. An IRA Inheritance Trust is a stand-alone trust that protects the beneficiary’s inheritance from creditors and from being taken during a divorce.
Many individuals do not realize the mistakes they have made with their savings, investing, and IRA planning and the long term impact those mistakes can have on their retirement. It is crucial to consult with a specialist to review your retirement plans to develop a game plan to provide lifetime income you and your heirs will never outlive.
Be sure to go online to www.womenofnb.com/financial and complete the financial personality worksheet. By having a better understanding of your unique financial personality, you can become more in tune with your behaviors as they relate to finances and planning so that you may keep seeing GREEN well into retirement. This knowledge will position you to take the next step of working with a financial professional, and will help you assume control of your financial future.
This educational article was written to make you aware of important issues many women face when planning for retirement. Before you make any decisions, it is important that you consider all of the advantages and disadvantages of those decisions. None of the topics discussed in this article are meant to give legal, tax or financial advice, and should not be interpreted that way.
Brooklynn Chandler Willy, JD, is an Associate with South Texas Tax Advisory Group. She specializes in IRAs, 401K rollovers, and IRA Inheritance Trusts. South Texas Tax Advisory Group is a full service firm offering estate and retirement planning with a skilled staff of legal, CPA and financial professionals.