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    It’s National Save For Retirement Week! Today’s Topic: Social Security

    Monday, October 22nd, 2012

    It’s National Save for Retirement Week 2012! A week dedicated to building knowledge and taking action toward securing your retirement. Each day this week we are going to look at a different contributing factor to retirement and help you increase your understanding of it so that you can take action and be prepared. Today we are looking at Social Security.

    We start with Social Security because it is a fundamental building block for retirement security, especially for women. Since women have longer life expectancies, they have a greater chance of exhausting other sources of income. Women reaching age 65 in 2010 are expected to live, on average, an additional 20.7 years compared with 18.6 years for men. Women represent 57 percent of all Social Security beneficiaries age 62 and older and approximately 68 percent of beneficiaries age 85 and older.

    Yet despite its importance, many people do not even understand the basics of how the system works. This can be costly! When and how you claim your benefits can greatly impact how much Social Security income you receive over the years. The more you learn now, the better prepared you will be in the future to maximize the benefits available to you. Use these helpful resources to find out more about how Social Security benefits work and how to best utilize them.

    For a quick test of your knowledge on Social Security benefits, review our Social Security checklist.  Did you know all the answers?  If not, listen to our five-minute podcast “Make the Most of Social Security” for an overview of benefits and how those benefits can be affected by early retirement, marriage, divorce, and widowhood.  For example, did you know you may receive Social Security benefits based on your own work record, your spouse’s work record or a combination of both?  You should always receive the highest amount for which you are eligible. For more information, check out this WISER factsheet, Social Security: What Every Woman Needs To Know.

    Social Security is often the first line of defense for women against poverty in old age. Clearly, women have a strong stake in ensuring the financial solvency of the program and making sure that the broad range of benefits remains. Women need to stay informed on the proposals and the debate to reform the current system. Read WISER’s special report on Social Security for a quick update on some current issues.

    For more information on Social Security, including spousal benefits, Social Security benefits and divorce, and a worksheet to help you understand your Social Security statement, visit the Social Security page on WISER’s website. Also visit www.socialsecurity.gov for lots of helpful information from the Social Security Administration, including how to review your Social Security statement online.

    Now that you’ve got the basics of Social Security covered, be sure to check back tomorrow for information about another important retirement savings vehicle–company benefits!

    Posted in Retirement, Retirement Planning, Social Security | Comments »

    Parents, it is Time to Just Say No!

    Thursday, September 20th, 2012

    As a parent, you try to teach your children good money management skills. You teach them how to save and how to spend responsibly. But while you’re busy teaching them how to respect their own money, don’t forget to teach them to respect your money too.

    Many parents can get themselves into bad financial situations by spending too much money on their children, especially once their children are adults. Things like college tuition and weddings are expensive, and while every parent wants to help their children out financially, it is important to not do so to the detriment of your own retirement funds.

    Time’s Moneyland recently put out a list of “6 Myths About Saving for Retirement.” They ranked the belief that it is important to prioritize your child’s college tuition over your own retirement as the second biggest myth of all. Moneyland pointed out that while it isn’t the perfect solution, your kids can borrow to go to college and they have a lifetime to pay that money back. You don’t have a lifetime to save for retirement, so you need to put your retirement first.

    Another big expense that many parents face is their child’s wedding. But remember, while it is nice to be able to help your child cover some wedding costs, it is not your responsibility to do so. Jeopardizing your own secure retirement for your child’s wedding is not good for you or for your child in the long run. When the time comes, your kids will be thankful that you saved enough for retirement and that they don’t have to dip into their savings to take care of you.

    But the bigger issue here, bigger than your ability to say “no” and put your retirement first, is teaching your kids to not put you in a situation where you feel badly for doing so. Talk to your kids, explain to them how much you have saved and how much you still need to save. Explain to them that while the money may be technically there, such as in an IRA account or in the stock market, that does not mean that you have extra funds lying around that can be spent at any time. This money is earmarked for a certain place and time and your children need to understand this and respect it. Teach your kids to be respectful of your money and to not ask for unnecessary financial help from you. If you explain to them why it is important for you and for them that you save enough money for retirement, hopefully you won’t be put in the position of having to defend yourself when you find yourself having to say “No.”

    Finally, let go of the guilt. Taking care of yourself financially is not selfish. It is an important way of saying that you love your children and you are doing all you can to prevent yourself from becoming a financial burden down the road.

    Posted in Daughters, Money Myths, Mothers, Retirement, Retirement Planning, Savings | Comments »

    Looking at the Whole Picture: Women of Color and Retirement

    Friday, August 17th, 2012

    By Beth Blair WISER’s National Academy of Social Insurance (NASI) Intern

    Retirement security, and particularly women’s retirement security, has been in the news a lot lately. Every day, my Google alert turns up a new article about older women’s poverty rates and lack of preparedness for retirement. It is true enough that women as a group are having a difficult time saving enough for retirement. However, women of color face additional challenges and are also much more likely to live in poverty in their elder years. This part of the story gets glossed over when we talk about women as a whole.

    Looking at the wealth of women, or their assets minus their debts, is helpful in understanding the barriers they face in saving for retirement; it shows how disparities across women’s lifespans affect their ability to save. A recent comprehensive report on the wealth of women of color was released by the Insight Center for Community Economic Development in 2010 (but keep in mind that because this data was collected prior to the recent recession, it is likely to overestimate women’s wealth). According to the report, single non-white women over 65 have a median wealth of $46,800, while single white women have a median wealth of $191,070. At earlier ages, many women of color have no wealth at all. For example, the median wealth of women of color in their working years, 36-49, is only $5. This number clearly illustrates the difficulty that women of color have in saving for retirement—when your debts exceed or nearly exceed your assets, how do you save for retirement?

    So why the wealth gap? There are many reasons, many of which stem from historic and current discrimination and barriers.  For example, A study by the National Community Reinvestment Coalition found that, in many areas, black loan-seekers are twice as or more likely to be given high cost mortgage loans, even when controlling for income. Because people of color were much more likely to be offered high cost mortgages, they fared worse than whites in the housing crisis. However, women of color are less likely to be homeowners than white women, and are therefore less likely to have wealth from home equity. They are also more likely to work in jobs that don’t offer pensions, such as in the service industry. When they do have pensions, they are not able to contribute as much due to lower earnings. Women of color are also more likely to have debt than white women, particularly credit card debt and student loans.

    The combination of gender and family structure also affects the wealth of women of color. Women of all races are likely to be the primary caregivers in their families, particularly when it comes to childcare responsibilities. This leads to less time spent in the workforce, reduced earnings, and reduced savings. Women of color are also less likely to be married, and are more likely to raise children by themselves, which decreases savings and overall earnings due to the financial burden of childrearing and time spent out of the workforce. It also affects Social Security benefits. While Social Security is the sole source of income for 25% of black women 65 and over, their benefits are likely to be lower than white women’s due to lower lifetime earnings.

    Women’s retirement security is an important issue that has been getting well-deserved media attention. But we need to look at the unique barriers that affect women of color, who are even more vulnerable to living in poverty in their elder years. Unless we do this, we are not looking at the retirement reality for all women.

    In the meantime, there are some options to bolster savings. The WISER website has many resources on budgeting and saving. In addition, you can look into opening an Individual Development Account (IDA). These savings accounts match your contributions, though they only allow withdrawals for specific purposes. Go to Cfed.org to see if there are any organizations in your area that offer them. You may also qualify for the Earned Income Tax Credit (EITC), a tax credit for low to moderate income workers. To find out if you qualify, check the IRS website at irs.gov/eitc or call 1-800-829-1040.

    Posted in Retirement | 1 Comment »

    Your 2012 Spending Plan

    Monday, January 16th, 2012

    This new year you may find yourself in a new financial situation. Whether for better or worse, it is important to take the time to assess where you stand and make a spending budget for 2012. (more…)

    Posted in 401K, Budget, Economy, Financial Planner, Reducing Debt, Retirement, Retirement Planning, Retirement Readiness Checklist, Roth IRA, Savings | 2 Comments »

    Long-Term Care: Don’t Go Bankrupt Trying to Pay For It!

    Monday, July 18th, 2011

    July is National Retirement Planning Month; a great time to assess your retirement goals and make sure you have the right plan in place to get there. One often overlooked part of the retirement planning process, however, is long-term care. Did you know that 70% of people over the age of 65 need some type of long-term care services? Or that 67 % of adult women have provided long-term care to someone in need? Providing long-term care can have a serious impact on a woman’s long-term finances and is something she herself may one day need. This month’s blog series will focus on the long-term and why it’s one of the most important investments women should make when planning for retirement.

    Now that you know why long-term care is important, as well as how to have a conversation with your loved ones about it, you may be wondering exactly how much long-term care actually costs.  Because long-term care encompasses such a broad array of services and supports, the costs can vary quite a bit.  To give you a better idea of these costs, in 2011, it cost:

    • $43,472 annually for home health aide services
    • $15,600 annually for adult day health care services
    • $39,135 annually for assisted living facility services
    • $70,445 annually for a semi-private room in a nursing home
    • $77,745 annually for a private room in a nursing home

      Depending on what state you live in, long-term care can cost significantly more or significantly less than these averages.  For example, let’s compare the annual cost of the same long-term care services listed above with California (a state with one of the highest cost of living in the U.S.), Tennessee (a state with one of the lowest cost of living in the U.S.) and Florida (the state with the highest number of seniors):

      California Tennessee Florida
      Home Health Aide $48,048 $38,896 $41,184
      Adult Day Health Care $20,020 $13,000 $15,600
      Assisted Living Facility $42,000 $36,960 $31,950
      Semi-Private Room in Nursing Home $77,745 $62,050 $76,778
      Private Room in Nursing Home $91,250 $65,883 $83,950

      To look up the cost of long-term care in your state click here.

      These services can clearly become pretty pricey overtime.  You may be wondering how in the world you’re going to be able to pay for long-term care.  You can pay for it out of pocket, but this is a very expensive option that many people cannot afford. Many may think that Medicare also covers these expenses; however Medicare actually covers very little when it comes to long-term care.  There’s also Medicaid, but you would have to first qualify for Medicaid by meeting the low-income requirement, which may cause you to spend down what assets you already have.

      For many individuals, the best option for paying for long-term care is through long-term care insurance.  Long-term care insurance helps to pay for many of the costs of care or personal assistance associated with long-term care that people might otherwise have to pay for themselves.  In our next blog, we will continue our discussion on long-term care, specifically focusing on what factors to consider when buying long-term care insurance.

      Posted in National Retirement Planning Month, Retirement, Retirement Planning | Comments »

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      WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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