What Every Woman Needs To Know About Planning For Retirement
Most of us don’t have retirement and estate planning high on our “to do” lists. We are often too busy taking care of today’s demands to worry about the future.
Nonetheless, statistics and experience show that women live longer than men, making it appropriate and necessary to provide for their own care, compelling them to make important decisions about their assets and estates. Indeed, 90% of women spend at least part of their adult lives single, usually at the ends of their lives. Planning your life now, will allow time to enjoy your retirement. Let’s consider a few prudent steps.
Is financial security really different for women and men? Do you need a will or estate plan if your husband already has one? Can you support your favorite charities, if you have to go into a nursing home?
Before You Retire
Women in their mid 40’s, are likely sill accumulating assets, and may begin wondering if there are better ways to manage them. In the years before retirement age, you may find yourself educating children, paying off a mortgage, buying a vacation home, or caring for both children and parents at the same time.
Your concerns about children and parents may cause you to start thinking about retirement. Visions of travel, volunteering, and making a difference in your community, may compete with worries about income, health, and your estate plan.
Example: Karen is 46, and earns a comfortable salary as a senior manager, allowing her to keep a lovely house on LBI.
Over time, she has built a comfortable nest egg in her retirement plan, and has some relatively well-performing inherited stock. She supports her college and local hospital, and makes smaller annual gifts to her church, and a few other local charities.
Because she has held the shares for a long period of time, Karen was able to make her charitable gifts with the stock, and balance her portfolio by purchasing other assets with the cash she would have donated.
After considering how she how she wants to live when she retires, how she will manage her healthcare needs, and how to manage her increased disposable income after paying off the mortgage; Karen writes a will, providing for her care, and for the charities she has supported over the years.
Early Retirement
The years following retirement often present the opportunity for enjoying free time, good health, and sufficient or steady income. Younger retirees may be interested in travel, hobbies, health and exercise, spending time with children and grandchildren, or volunteering; and may be also be adjusting to a husband’s retirement, dealing with the illness or death of a spouse, and thinking seriously about estate planning.
Example: After her husband’ sudden
and unexpected death, Martha realized her estate plan required updating. Although
they had a will, as well as trust arrangements to minimize their estate
taxes, Martha understood that she needed to review those plans as a
single woman. In fact, Martha’s grandchildren had not been
born when the will was last updated.
Martha’s lawyer recommended a financial planner. Together
with her two trusted advisors, she decided to use her appreciated
stock to fund a charitable trust to help her grandchildren with through
college, and named a charity to receive the principal at the end
of the eight-year term.
Traditional Retirement
Your less active years – from age 75, on – may find you focused on personal health, family, friends, and life’s simple pleasures. You are likely to be on a fixed income, and drawing on pensions, annuities, and Social Security. By now, you may have moved to a retirement or continuing care community, or a nursing facility.
Life-income gifts – such as the SOCH Foundation’s Charitable Gift Annuity program – may be ideal at this time. Investments in stocks or mutual funds that yield smaller returns can be reinvested in a charitable trust or annuity, to earn needed income, while providing an income-tax deduction.
If you have not already done so, planning for final gifts to those most important to you – family, friends, and organizations – should be done while you are able. Now is the time to make sure your financial concerns will not become a burden. You want to be able to complete your estate plan, and forget about it.
Example: Though her husband passed
away nearly a decade ago, Victoria is in health is good for her age. Last
year, at age 82, she became a great-grandmother. She enjoys reading
and bridge, and volunteers at the hospital gift shop.
After her husband died, Victoria’s lawyer helped her review
her estate plan. Together with her husband’s long-time
accountant, she decided to roll over some low-yield CDs into a charitable
gift annuity, earning a tax deduction and a guaranteed fixed income
for the rest of her life. The remaining balance will benefit
the hospital.
Whatever your stage in life, do not postpone decisions about healthcare, lifestyle, assets, heirs, charities, or the final disposition of your estate to a time when you may not be able to make good decisions for yourself, leaving them – perhaps unwillingly or unwittingly – to your loved ones or the government.
Everyone has hopes and dreams, and financial needs. While similar, a woman’s estate planning should differ from a man’s, in light of longer lifetimes. It is critical to make wise decisions, and seek good counsel. Plan now, review your plan at important milestones, and avoid later headaches and heartaches.
This article is intended to help you ask important questions. As always, we recommend consulting with your personal financial advisor.
This article was prepared by Deborah R. Mathis, CPA, CHBC, Director of the Healthcare Services Group of Cowan, Gunteski & Co., P.A; and Barbara Bobbin Wilkinson, Financial Service Professional/Agent for New York Life Insurance Company. Both are members of the SOCH Foundation’s Planned Giving Committee, a volunteer group of the area’s leading financial professionals, lending their time and expertise to advance the charitable mission of Southern Ocean County Hospital. To learn more about charitable estate planning, and special recognition granted through the Knight Society, contact SOCH Foundation Executive Director Chris Rollins, CFRE, at (609) 978-3081, or click here to contact us now.
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