All architects share the need for proper financial and retirement saving planning. For women architects, creating a sound financial and retirement plan is even more essential since issues like increased life expectancy, unforeseen changes in family structure, caring for aging parents, and the likelihood of outliving your spouse all present significant challenges for many female architects. There are some key “rules of the road” that can be used to establish and maintain a sound financial and retirement strategy and, whether male or female, all can benefit from proper planning.
A key goal of investing for retirement is making sure to save enough money to last throughout your lifetime. On this score, women may need to save more than men. The current life expectancy of a female at birth is roughly 81.5 years, as compared with 77 years for a male. Although 5 years may not appear significant, many people in this age group incur significant expenses for healthcare and other items while living off Social Security and personal assets. Often, the last few years of life include much higher medical and living care expenses than at any other time in your life.
Keep in mind that life expectancy statistics are averages and it is possible for people to live longer. It is not unusual for an individual’s retirement to last 20 or 30 years—or more. The length of a person’s career and how much time an individual must work to build retirement assets is an important issue. Many women take time off for caregiving responsibilities, and during these years they may not be adding to their retirement portfolios. Yearly contributions and compounding of assets during your early years are important in maximizing your total savings at retirement.
In addition, time off from work may affect Social Security benefits because those who are not working do not earn credits that are used to determine retirement benefits. Also, parents, children and other loved ones often have financial needs, and both women and men may provide help for family members, which may divert funds from retirement savings.
The following are five things that women should consider when planning for financial independence during retirement:
- Educate yourself. Learn and research everything you can about investments and retirement. While you can rely on a financial professional, the more you know about the various financial vehicles available to you, the better-equipped you are.
- Plan for a long life. If possible, make the maximum contributions to qualified retirement plans. Sacrifice in other areas, if possible. By making little sacrifices today, you can help plan for the lifestyle you want tomorrow.
- Get involved. If you aren’t already involved in your own household finances, get involved now. Be aware of your expenditures and manage your income today. Your future is in your hands. It’s time to take charge of your retirement planning.
- Save aggressively and early–if you can. The more time you give your investments to earn income for you, the more you may be able to accelerate the income potential of your original investment.
- Develop a retirement strategy and write it down. Consider what life might look like for you in retirement. Then, identify a goal for how much you will need to save each year.
Estimating How Much You’ll Need
Every woman’s life is unique, and women should capitalize on the benefits available to them to build the assets needed for their later years. It’s important not to underestimate how much you may need or the importance of ongoing contributions to retirement accounts to build assets over time. Although there are no guarantees, the longer you stay invested, the more likely your contributions may benefit from compounding (when investment gains are reinvested and potentially earn even more over time).
A financial professional can help you to calculate how much you are likely to need for your later years. Be sure to consider how you will pay for healthcare expenses not covered by Medicare, long-term care and other medical insurance. When considering sources of retirement income, log on to ssa.gov or review your annual statement to estimate your retirement benefit from Social Security. If you find that your retirement assets are coming up short, delaying retirement or saving more while you continue to work may be helpful strategies.
The AIA Trust is here to help
The AIA Trust offers retirement savings and distribution vehicles through Equitable to assist you in achieving your retirement goals. Plans can be established for one-person firms—or for many employees—utilizing a variety of retirement savings and distribution vehicles. Equitable can assist you in achieving your goals based on more than 51 years* of experience working with association members and over 25 years with AIA architects. Equitable can help you review your options and offer you choices that will alleviate the burden of establishing and managing a retirement savings plan. It’s one of the ways that the AIA Trust makes it easier for you to focus on doing what you do best: architecture.
This article has been written for general information purposes only. This material does not constitute an offer or solicitation of any kind and is not intended, and should not be relied upon, as investment, tax, legal, or financial advice or services.
The Members Retirement Program (contract form #6059) is funded by a group variable annuity contract issued and distributed by Equitable Financial Life Insurance Company (Equitable Financial), 1290 Avenue of the Americas, New York, NY 10104. Equitable Financial does not provide tax or legal advice. You should consult with your attorney and/or tax advisor before purchasing a contract.
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GE-3457868 (2/21) (Exp. 2/23)