Say what you will about the state of the world right now, but some things are objectively better than they used to be. When it comes to women’s welfare, equal education and opportunity to join the workforce have created several positive outcomes.
For the most part, women no longer have to depend on men for financial support. In the past, if your husband died, you were almost sure to see a tough life ahead. Historically, widows in the U.S. often relied on the charity of the community, the church, and re-marriage to survive.
While such dependence is no longer a requirement, retirement planning is something every widow should do. Sure, they do not face the same challenges as they did before. However, there are other factors that need to be accounted for. These include a longer life expectancy, exorbitant healthcare expenses, and seemingly ever-increasing inflation.
In this article, we will look at three tips to keep in mind when planning for self-sufficiency in your retirement.
1. Take Stock of Your Current Financial Standing
Before you even think about your future, you need to find out where you currently stand with your finances. There are several aspects to look at here.
Are you earning an income at the moment? Are you reliant on a single source of income, or do you have social security benefits, pensions, annuities, or rental income?
Knowing how much income you have is critical for choosing your investment options. You will also want to assess your monthly cash flow, as this provides a more realistic picture of your situation.
This is also the time to start looking into any debts or obligations you need to pay off quickly.
The most common types are mortgages, car loans, and credit card debt. Find out how much money you are bleeding each month through them. It is difficult to invest in your retirement if a large chunk of your income is going toward debt repayments.
2. Be Realistic With Retirement Goals
Most people aren’t going to be living extravagant lives in retirement. Unless you are loaded and set for life, you will need to rethink how frequently you indulge in unnecessary luxuries.
If you are hoping for an early retirement, remember that it requires considerable investment knowledge and planning.
Good retirement planning will require you to be clear on how long you intend to work, and how hard. Doing so puts your retirement goals in perspective and ensures your decisions are based on facts.
Similarly, be realistic about how much you are allocating for different contingencies. Don’t blindly set aside a random figure by thinking “I should set aside $5,000 for healthcare.”
Even a short hospital stay can leave you in debt if you haven’t planned for it properly. Thus, insurance is going to be one of the biggest money savers for you in the long term. If you don’t already have a good policy, make finding one a top priority.
3. Choose Your Financial Advisors Well
Scammers can come from anywhere. They could be one of your friends, financial advisors, and outright direct scammers.
These people tend to believe that widows are easy targets and lack financial knowledge.
Financial advisors will be the trickiest to deal with since their advice can be subtly deceiving. The most common approaches they will rely on involve getting you to purchase misleading insurance policies and annuities.
According to Widowed Community, 95% of financial advisors operate on fees and commissions. This means that they have an active interest in selling you policies that benefit them. Sure, they aren’t all out to make a buck of you, but it’s better to be safe than sorry. Try to find a “fee-only” (Not fee-based) financial advisor.
There are also some obvious red flags you should be on the lookout for when hiring a financial advisor. If you see the following signs in your advisor, run the other way.
- High-Pressure Sales Tactics: Some advisors will try to push you into making quick decisions. They will tell you that a certain limited offer or policy is too good to pass up.
Just walk away.
- Cookie-cutter solutions: If your advisor tries to push overly generic advice without taking into account your specific circumstance, be cautious. Seek information on how the advice they are giving you will help in your context. They tell you to “trust me”?
- Lack of Transparency: This should be easy to scope out. If they get all evasive when you press them for information about the specifics, walk away. There needs to be transparency about the returns, their commissions, and any conflict of interest on their end.
Regardless of where you are in your retirement planning process, don’t panic. It is easy to feel overwhelmed at the thought of having to save and survive on your own. These moments of desperation are exactly when you can make rash and risky investments.