Women must look beyond Social Security to help fund retirement

FALLBROOK – Women tend to depend more on Social Security for several reasons, including longer life spans, lower average earnings and more time spent away from the workforce to care for family members. Nearly half of all senior unmarried women receiving Social Security benefits rely on them for 90% or more of their total income, according to the Social Security Administration.

But it isn't by choice, because Social Security payments by themselves are not enough to fund retirement. If someone is married, their situation is somewhat different, but they don't want to depend on Social Security too much. To help boost the chances for a comfortable retirement lifestyle, what should women know about Social Security and other steps should they take? Consider these suggestions for retired women.

They should understand their Social Security benefits.

People can start taking Social Security as early as 62, but their checks will be bigger if they wait until the full retirement age, which likely will be between 66 and 67. They can also defer taking benefits up to age 70 and receive even higher benefits.

Social Security offers spousal and survivor benefits, so it's important to coordinate any actions with their spouse. For example, a person is entitled to receive up to half of their spouse's full retirement benefit, offset by their own benefit and reduced if they claim early.

Additionally, the survivor benefit can provide either their benefit or 100% of their deceased spouse's, whichever is larger. It may make sense to have the higher-earning spouse delay taking benefits for as long as possible to maximize the survivor benefit. A person might be eligible for spousal and survivor benefits if they're divorced, so it's important to understand all of the options.

Contribute as much as possible to retirement plans.

Because women take more time away from work to care for their families, they often have lower balances in their employer-sponsored retirement accounts. That's why they may want to put in as much as they can to their 401(k) or similar plan – at least enough to earn an employer's matching contribution, if one is offered.

And whenever a woman gets a raise, increase the amount they contribute. Even if they have a 401(k), they may still be eligible to invest in a traditional or Roth IRA. And with both a 401(k) and IRA, fight the temptation to invest too conservatively, especially if they're many years from retirement.

To make substantial progress toward their goals, a woman will need a reasonable amount of growth-oriented investments in all their retirement accounts, while still accommodating their risk tolerance.

Create an appropriate withdrawal strategy.

When they retire, they'll need to calculate how much they can afford to withdraw each year from the 401(k), IRA and any other retirement accounts. A person must be careful not to withdraw too much, too soon, and risk outliving their resources. They may want to consult with a financial professional who can help them determine a withdrawal rate appropriate for their age, income sources, lifestyle, projected longevity and other factors.

The suggestions above can apply to everyone. But a woman may find them particularly important as they strive to achieve the retirement lifestyle they deserve.

Edward Jones Financial Advisor Brian Schrock is located at 1434 S. Mission Road, Suite B, in Fallbrook. For more information, call (760) 731-3234.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.