Why did I title this article, “Think You Can Live on Just $13,500 a Year?” Because that’s the typical amount women over 65 receive from Social Security. Whether you’re in your 30’s, 40’s or 50’s, it really doesn’t matter how much you expect to receive from Social Security when you retire. Because whatever the amount, it won’t be enough to live on.
What’s the solution? Two of the most unappetizing words in the English language: “financial” and “planning.” So in honor of Financial Planning Week, let me assure you that with the right finance professional in your corner, learning how to reach financial independence is far from boring and can actually be fun!
While you may not be at a point in your life where you care to spend a couple of thousand dollars hiring a financial planner to work up a comprehensive financial plan, there is low hanging fruit you can tackle quite easily. In my experience of working with scores of women, I’ve noticed that some have two or three “orphaned” retirement accounts from old employers and they have no idea how much each is worth. With a minor time commitment, these orphaned accounts can often be consolidated into one individual retirement account (IRA) and the money can be invested in a wide variety of assets including (but not limited to) stocks, bonds, gold and real estate. With the typical employer-sponsored 401(k) or 403(b), the account holder’s investment choices are often limited to a small menu of mutual funds which sometimes carry high fees that reduce the value of the account over time.
Are you a woman who has chosen mutual funds based on a co-worker’s advice or the system of “eeny, meeny, miny, moe?” I don’t know about you, but I want to know what’s in my soup before I eat it. If my goal is to lose weight, a soup full of cream isn’t going to get me there. Likewise, if my goal is to have $1M saved for retirement, a soup full of high-fee mutual funds with an inappropriate allocation for my age and risk tolerance won’t help me get there either.
Let’s assume you are 35 and hope not to have to continue working past the age of 65. You have 30 years to save and grow your retirement fund. You have retirement funds from previous employers that altogether total $40K. If you were to consolidate those funds into an IRA and start contributing just $400 each month for the next 30 years into a diversified, dividend-paying basket of stocks, there is a strong likelihood you would end up with $1M by the time you retire.
It’s all up to you. So find a financial advisor, planner, or coach, and request a consultation. Most of us financial professionals will offer one free of charge. We’re here to help you avoid becoming a bag lady, but you need to reach out and request help.
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Laurie Itkin is a financial advisor and author of the Amazon bestseller, Every Woman Should Know Her Options: Invest Your Way to Financial Empowerment. She appears several times a month as a finance expert on San Diego’s Fox 5 News. Raised by a mother who never obtained financial security, Laurie is dedicated to helping women of all ages reach financial independence. You can reach Laurie at laurie@theoptionslady.com or www.theoptionslady.com for a complimentary consultation.
