Mother's Day soon will be here. If you're a mother, you will (hopefully) receive thoughtful cards and gifts. But there's one present you might eventually want to give yourself, and it's a gift that truly does keep on giving: a strategy for your retirement.
Of course, it's important for everyone to build adequate financial resources for retirement - but the challenge is even greater for women. Largely because of family responsibilities, women spend on average 12 years less in the work force than men, according to the Women's Institute for a Secure Retirement. Less time in the work force equates to lost earnings, missed promotions, smaller and fewer raises and reduced retirement plan benefits. In fact, men had on average about $91,000 in Individual Retirement Accounts, including all IRA types and the amounts rolled over from other retirement accounts, compared with just $51,000 for women, according to a recent report issued by the Employee Benefit Research Institute.
Whether you're married, divorced, widowed or single, you'll want to build financial resources of your own and be prepared to manage your finances during your retirement years. You'll be helping yourself, and by becoming financially independent, you can avoid the possibility of depending on your grown children for support.
To help ensure a financially secure retirement, consider these ideas:
? Fully fund your IRA each year. As the numbers above show, women are way behind men when it comes to funding their IRAs. And IRAs offer tax advantages. A traditional IRA has the potential to grow on a tax-deferred basis, while a Roth IRA has the potential to grow tax free, provided you've held your account at least five years and you don't start taking withdrawals until you're age 59 1/2. So make it a priority to "max out" on your IRA each year. In 2011, you can put up to $5,000 into a traditional or Roth IRA, or $6,000 if you're 50 or older.
? Boost your 401(k) contributions. Put as much as you can afford into your 401(k) or other employer-sponsored retirement plan. At the very least, contribute enough to earn your employer's match, if one is offered. (In 2011, you can put in up to $16,500, or $22,000 if you're 50 or older.) Your earnings have the opportunity to grow tax deferred, and you have a range of investment options, so your 401(k) or other retirement plan can be an effective, flexible way to put money away for the future.
? Invest in an annuity. If you've reached the contribution limits of your IRA and 401(k), you might want to consider purchasing an annuity, which can be structured to provide you with regular payments for the rest of your life. And this lifetime income source is especially important to women. At age 65, women can expect to live on average almost 20 more years, compared with slightly over 17 for men of the same age, according to the Centers for Disease Control and Prevention.
As a mother, you willingly spend a great deal of time and effort on your children. But it's important to also think about yourself and your future, so review your strategy for retirement with your financial adviser, and take the actions needed to help make sure you can enjoy all the Mother's Days of your life in the comfort you deserve.