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January 01 2008
Seven Financial Tips for Women and Men For 2008
1. Invest more. To
make up for discrepancies in retirement benefits, people
should consider investing more. For example, a person who
takes seven years off from a 40-year career can expect to
receive only half the pension benefits of someone with 40
years of uninterrupted services. The good news is that the
U.S. Department of Labor reports that in an economy where the
earnings of almost all other groups have remained the same or
decreased, earnings of women have increased. Higher earnings
for women should mean the potential for more investments.
2. Know
your risk tolerance. Consider how much risk you are willing to
take in exchange for the potential to earn higher returns.
Historically, equity investments have provided higher returns
over the long term than less-risky investments, such as money
markets and short-term bonds, although past performance is no
guarantee of future results.
3.
Participate in employer plans. Collect information about the
retirement benefits that are available through your employer
and actively participate in any plans offered, taking
advantage of all possible company matches and tax-deferred
contributions.
4. Do
not depend on pensions or Social Security. Fewer years in the
work force, fewer years with a single employer and lower pay
all may contribute to a lower average pension for retirees.
Women also tend to receive lower Social Security benefits than
men. Benefits are calculated based on a persons highest 35
years of earnings. If the benefits recipient doesnt have 35
years in the work force, the Social Security Administration
will add zero-earnings years to the record to equal 35 years.
This will lower the average monthly earnings figure and may
significantly lower your benefits.
5. Get
out of debt now. Debt is a serious issue. However, credit
counselors report that espc women are more likely than men to
take the first step toward becoming more disciplined and
reducing their debt. First, understand your spending and
reduce spending so you dont continue to add to your debt. Then
attack your existing debt by paying off high-rate debt first
and if possible transferring high-rate debt to lower rate
credit cards.
6. Do
tax planning. With more female business owners and more single
women buying homes and qualifying for mortgage interest and
property tax deductions, tax planning is becoming an integral
part of everry persons financial lives. If possible, always
contribute the maximum amount to your IRA and/or 401(k) and
maximize your tax deductions.
7. Keep
retirement top of mind. Although women have made many
impressive strides toward financial independence, they report
having only half as much for retirement as men ($40,000 in
annual retirement income for women vs. $80,000 for men).
Generally, because women live longer than men, they should
save 12% of their gross income for retirement, rather than
just 10%.
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