Prime Time - Jane Fonda [116]
Believe me, all of these things happen to smart women who think they will be provided for upon a spouse’s death!
Have you discussed these matters with your husband or has he told you, “I’ve got everything under control”? Maybe yes, maybe no, but you have a right to know. Our income in our seventies and eighties may determine our outcome.
Women may be single by choice or by circumstances. But since women live longer, the odds are that we will live our later years on our own. It’s worth thinking about and planning for right now.
Draw up a baseline budget that you will need to live on when you stop working. Include in it the cost of long-term care should you need it, and start right now figuring out how you’re going to fund it.
One of the best books about financial planning for your retirement that I’ve read is The New Savage Number: How Much Money Do You Really Need to Retire? by Terry Savage.3 I often urge friends to buy and read it. When Terry says that within every woman there is a secret fear of being a “bag lady,” you know she is talking to you. (Terry’s website is www.terrysavage.com.)
Savage says that there is easily accessible and inexpensive help for planning your retirement. Let me summarize a few of her points about the key issues: You need to start saving, and investing to increase your savings. Then you should carefully plan your withdrawals from your savings after retirement so you don’t run out of money before you run out of time.
THREE QUESTIONS
Terry Savage asks us to start our planning by answering three questions. They are basic but require you to put some starch in your spine and remove any blinders of denial.
How old do I expect to be when I die?
How do I rank the following three retirement solutions?
Working longer before retiring
Lowered standard of living in retirement
Saving more now
If I knew I could get trustworthy advice about how to save, invest, budget, and withdraw, would I be willing to confront the financial issues of retirement?
Terry’s first step is to help you get a realistic perspective on how long you’re likely to live. (You may be surprised, since women over age eighty-five are the fastest-growing demographic!) For some insight into the question of longevity, Savage sends you to a website: www.Livingto100.com. You enter information about your age, health, and eating and exercise habits, along with some information about your parents’ longevity, and you’ll get a personalized estimate of how long you might live. Once you’re armed with that information, Savage suggests going to www.choosetosave.org, a website created by the nonprofit Employee Benefit Research Institute. Click on the “Ballpark Estimate” tool for help in determining how much you should be saving, given your earnings and your lifestyle and when you hope to retire, so your standard of living doesn’t drop sharply when you stop bringing home a regular income. Using this online calculator, it’s easy to see the impact of working longer, contributing more, changing your investment style, or a combination of those variables.
You may discover that you are unable to save more or that your investments aren’t bringing in big enough returns to give you a secure retirement. In that case, you may have to consider working longer hours now or continuing work for more years to allow your nest egg to grow. Or perhaps you can convince your company to keep you on part-time. Older workers have enormous things to teach incoming, younger workers. Research shows that companies that make it possible for older workers to stay by rearranging hours, creating new job descriptions, and so forth, wind up earning more profit. Or you might investigate the possibility of using your skills—computer, sales, management, leadership skills—for salaried work in a nonprofit