Women, says Cathy Curtis, in particular single, divorced and widowed women, face different retirement challenges than men and can often benefit from a different type of counseling. One important reason, notes Curtis, a fee-only financial planner who serves a mass-affluent base of women clients in the San Francisco Bay area, is that women tend to live longer than men and need to save for a longer retirement. At the same time, Curtis points out that women still face certain obstacles to saving that many men do not. For one thing, many women temporarily leave the workforce to raise a family or care for aging parents, which interferes with their ability to save. For another, on average, women still earn only 70% to 80%of what men earn in similar occupations. Curtis also points to a cultural mindset that still influences many women in their 50’s, who were raised believing that someone else would take care of them. And she says that many of these women get shortchanged in a divorce, especially if the male partner was the dominant earner in the relationship. For all of these reasons, when Curtis does a retirement projection for her female clients, they often come up short of where they need to be. “But then at least they know where they stand and can plan from there,” she adds. One problem area is that many working women who are making a good salary “have a huge discretionary budget that they tend to ignore; they’re afraid to look at it,” Curtis says. This is one of the first areas that she tackles with her clients, beginning by identifying any spending areas, such as restaurants or clothes, which may be out of control. If cash flow becomes a real issue, Curtis will suggest tools to help the client stay on top of her budget. One tool she frequently recommends is the web site Mint.com, which tracks members’ expenses and alerts them when they’re over budget. Since the process is fully automated, it’s easy and fairly painless to use, as opposed to budget applications like Quicken, which require the user to enter data daily. Curtis also ensures her working clients are making the most of their retirement savings opportunities, such as IRAs and 401 (k)s, and also recommends that they start an after-tax account to save for retirement. “It’s really important to have different buckets of money,” she says, because a second source of savings allows the client to reach age 70-and-a-half before she has to begin drawing down her retirement account and paying taxes on it. Since the money will continue to accumulate tax free until then, the client will be much better off from a tax perspective if she doesn’t have to begin depleting it sooner, while waiting also helps ensure that the account will last throughout her retirement. Another great savings tool, Curtis says, is a Roth IRA, which allows the client to accumulate after-tax dollars tax free. Another advantage of a Roth, she adds, is that the funds can be held longer in the account and don’t have to be withdrawn starting at age 70-and-a-half.
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