Women tend to earn less than their male counterparts. They save less toward retirement. Many of them take a break from work to rear children and they spend more time taking care of the elderly. All these factors have an effect, Phelan says.
Her response has an acronym, Stackable Income Streams to Empower Retirement Security – SISTERS. The objective is to “stack” as many sources of retirement income as possible. For instance, if a woman has five sources of income, each paying just $12,000 per year, the total for a year is $60,000. Possible sources for this income are Social Security, investments and savings, retirement plans such as 401ks or IRAs, part-time work, inheritance, annuities, home-based or small business, rental property, life insurance and home equity.
She suggests that women get together and pool their information. In some cases, there will be opportunity for collaboration that would improve the retirement outlook for more than one of the parties.
Her tips for building a healthy retirement:
Research your own circumstances. Consider how much in resources you will reasonably have, what kind of lifestyle you would like, whether there are potential sources of income you have overlooked.
Delay retirement as long as reasonably possible. Talk with a professional finance planner and look at alternatives. It may well be necessary to continue generating income past usual retirement age. Working part-time actually can be a good alternative. It keeps you active and healthy. It gives you more time to prepare mentally for retirement.
Pool assets with like-minded women to create a small business. Varied work experiences, say marketing, artistic talent and accounting, might add up to a viable business. Make it home-based if that seems reasonable. Crafts and hobbies can be made into money-making undertakings.
Consider renting out rooms if your home has become larger than you need. Get a roommate or downsize to a less expensive home. Phelan points to the experience of a woman who rented rooms to local art students, using the money to invest in ways that generated more income.
Become financially literate. A professional financial planner may seem a heady step for many women, but the advice can be well worth moving a little out of your comfort zone.
Understand Social Security issues. The longer you delay retirement, the more money you will receive each month. Each year you wait increases your benefit by 8 percent, up to age 70.
Pay off debt as quickly as possible, particularly credit card debt, and create a realistic budget that avoids any further debt.
In a word, become responsible for your own retirement planning. The sooner you begin, the fewer problems you are likely to encounter when the time comes.