3 Ways to Bridge the Gender Savings Gap

This post originally appeared on the National Life Group Main Street blog on 3/9. By Maria McLendon.

When it comes to savings, the gender savings gap is huge. A recent study[1] indicated that women have 50% lower savings than their male counterparts. There are a number of reasons that this disparity exists, among these are that, on average, women earn lower salaries than their male counterparts and will spend fewer years in the workforce. However, there are actions that women can take right now, that will help improve their savings and provide a bridge to end the gender savings gap.

1) Start Now

The very first step to eliminating the Gender Savings gap is for women of all ages to start saving now. If you are a parent of a young daughter, start saving on her behalf—even if it is coins in a piggy bank. If you are a young woman just starting your career, start saving now—even if it is just a few dollars a week. By the time you are in your 30s, you should be saving 10-15% of your income and the sooner you start, the more quickly you can get to that rate of savings.

2) Make Consistent, Incremental Increases

Commit to increasing your rate of savings every year. Increasing the amount you save by just $25/month every year could mean that you will have $5,000 more in retirement savings, and an increase of $150/month[2] every year could mean more than $34,000 in savings when you get to retirement.

Check out this image for more ways that incremental increases can make a positive impact on your long-term savings balance.

3) Keep Things Balanced

Make sure that at least a portion of your savings is in lower-risk products that are not subject to loss from economic or stock market volatility. Fixed Annuities and Fixed Indexed Annuities are insurance products that offer guaranteed[3] rates of interest, protect your principle and interest from loss due to market downturns (assuming you don’t make any early withdrawals), and can offer the advantages of tax-deferred savings when part of a retirement plan.

The surest way to make change is to take action. Do something today to help close the gender savings gap for tomorrow.

[1] Women versus men in DC Plans, Vanguard white paper, October 2015.

[2] Assumes a 3% rate of return for 15 years before taxes are assessed. This is a hypothetical example for illustrative purposes only – not representative of any particular investment or insurance product.

[3] Guarantees are dependent on the claims paying ability of the issuing Company. Because they are meant for long-term accumulation, most annuities have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the annuity. In addition, withdrawals prior to age 59 ½ may be subject to a 10% Federal Tax Penalty. All withdrawals made from annuities with pre-tax contributions are taxed as ordinary income. All withdrawals from an annuity purchased with non-qualified monies are taxable as ordinary income only to the extent there is a gain in the policy. Indexed annuities do not directly participate in any stock or equity investments. This is not a solicitation of any specific annuity contract.

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New Study: Americans Retirement IQ is Low

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A startling number of baby boomers don’t know how much money they need to live comfortably during retirement, and without a target in mind, have ended up saving very little. In fact, 1 in 4 baby boomers have less than $5k saved for retirement.

But the good news for boomers struggling to plan for their golden years is it’s easy to raise your retirement IQ. Start with the basics of estimating costs, get a balanced portfolio in place, and research financial products that offer a guaranteed stream of income no matter how long you live.

Although many Americans think they are financially savvy, new data shows how the group closest to retirement, baby boomers, struggles with retirement fundamentals and is not saving enough for their golden years. New data released by the Indexed Annuity Leadership Council shows that many baby boomers aren’t financially prepared for retirement – they have little saved, are consumed about lifetime income options, and don’t know how much money they need to live comfortably.

  • 60% of baby boomers think they need less than $1 million in retirement, when in reality at least a quarter of a million will be needed for health care costs alone
  • 1 in 4 boomers have less than $5,000 saved for retirement
  • Nearly half of boomers don’t know that there are financial products that deliver lifetime income
  • 2 out of 5 boomers think they will get more money from Social Security than the average monthly payment

Many baby boomers are banking on Social Security as a main stream of money for retirement. Yet, more than half of boomers cannot correctly guess the average monthly Social Security payment. In fact, many think the average monthly payment is $500 more than it actually is – a budget miscalculation that will leave them almost a quarter of a million dollars short over a 30-year retirement.

Social Security isn’t the only consistent paycheck available in retirement; Fixed Indexed Annuities (FIAs) can provide a steady, guaranteed lifetime income stream with minimum guaranteed interest credits. FIAs can serve as part of a balanced financial plan because they do not directly participate in any stock or equity investments and protect your principal from fluctuations in the market.

Budgeting troubles continue when boomers are asked what they would do with a large cash gift as retirement doesn’t come to mind for many.

  • 40% of boomers prioritize lifestyle purchases over retirement savings
  • 52% of boomers have debt to pay down before saving for retirement

“Struggling to estimate how much money will be needed during retirement or sifting through different financial products can feel like a big hurdle, especially for those close to retirement,” says Jim Poolman, executive director of the IALC. “The good news is it’s fairly easy to increase your retirement IQ.  Start with the basics of estimating retirement costs and getting a balanced portfolio in place.”

Ensuring your savings can fulfill your retirement expectations starts with calculating how much you’ll need for the entire length of retirement. You’ll need to take into account your lifestyle budget, Social Security benefits available to you and any lifetime income streams. Once you know how much you’ll need, you can evaluate your current savings plan and how the products in your portfolio are helping you achieve your retirement goals.

How will you pay for retirement? Find out how much you will need with IALC’s retirement calculators.

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Data trends were compiled from the GfK’s KnowledgePanel, a nationally representative sample of 6,490 Americans between April and May of 2016 and Toluna’s online panel in August 2016, among n=510 adults (ages 18 and over).  Figures for age, sex and region income were weighted where necessary to bring them into line with their actual proportions in the census population

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Employee Appreciation Day & Your 401(k)

Today, marks National Employee Appreciation Day—an opportunity for managers and bosses to take a moment, appreciate their employees and thank them for their hard work. But this likely isn’t the only time you could enjoy a perk from your company.

Many employers offer 401(k) programs as part of their benefits package, allowing you to begin setting aside a portion of your income for those golden years. The best part? Many employers even offer a matching program, which means they will match a certain percentage of your contributions. Not participating in this program is like leaving money on the table. It’s just one little way your employer can show you they care each and every day.

Maxed out your 401(k)? Consider adding a Fixed Indexed Annuity to your portfolio—there’s no cap on how much you can contribute and adding an FIA can help bring much-needed balance to your mix of retirement savings products.

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Don’t Take the Journey Through Retirement Savings Alone

We live in a high-tech world where information about all topics under the sun is available at our fingertips. We are moving toward self-service and automatic access to everything. You can look at your checking account balance on your phone; you can make dinner reservations with a couple of clicks, and you can confirm a dentist appointment with a one-letter text message response, all within a matter of minutes.

While high-tech solutions offer tremendous convenience, some things are still much better when they are high-touch. One of these things is retirement planning and creating a financial plan for the future.

There are many options and components available when you are building your retirement plan, and professional guidance on how these components can work together can make a significant impact on what your future values will be.

401(k), 403(b), 457 and other qualified retirement plans are tax-advantaged plans established by the IRS, to help Americans save for their retirement years. Many organizations that offer these plans provide their employees with self-service options to access the savings and investment components within these plans.

While this is indeed convenient, it can be very confusing to know which options to select. Working with a professional to clarify the choices that are available to you, and the impact that those selections can have on your savings and retirement income potential can prove to be invaluable advice for the future.

Additionally, financial professionals can help make suggestions on what your portfolio may be missing. For example, a sit down meeting with an industry professional may show you that your portfolio is in need of balance that could be added by incorporating a fixed indexed annuity. Seeking guidance on your options for retirement savings could mean all the difference into your golden years.

This blog was adapted from this original article, which appeared in the National Life Group Blog on February 15, 2017.

 

 

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Celebrating the 22nd Anniversary of Fixed Indexed Annuities

Move aside, Valentine’s Day… there’s another reason to celebrate! This week, we’re commemorating the 22nd anniversary of Fixed Indexed Annuities (FIAs). While we can’t guarantee flowers or heart-eyed emojis, this anniversary marks the continuous advancement of a retirement product that can offer guaranteed lifetime income. Fixed Indexed Annuities (FIAs) are great for your conservative investing dollars and a great way to diversify your retirement savings.

FIAs were first introduced to consumers on February 15th, 1995. FIAs can be a smart option for most ages and savers at any level. Join the growing movement by taking advantage of the benefits of FIAs to help create a sustainable retirement future.

  • The retirement landscape is evolving – people are living longer and Social Security is becoming less secure. Coupled with market volatility, the future is uncertain. Adding an FIA to your retirement portfolio can help generate steady, lifetime income.
  • Other retirement products have limits that hinder flexibility and savings growth. An IRA or 401(k) might control how much you’re able to contribute, but FIAs do not have annual contribution caps.
  • Balancing your portfolio can help your retirement dreams come to life. Diversifying your account through using both employer offered programs and products like an FIA can create opportunities for traveling, spending time with friends, or investing in your grandchildren’s future.

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FALL IN LOVE WITH YOUR RETIREMENT SAVINGS PLAN

Finding your soulmate and saving for retirement actually have a lot in common. Both can be intimidating, require careful planning and lead to some nerve-wracking decisions. However, making informed steps in both scenarios can leave you feeling happy and secure.

Fall in love with your retirement savings plan with these helpful tips:  

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Bringing Balance to Your Retirement Portfolio

In our hectic lives, balance is something many of us strive to achieve. From work-life balance to finding balance in your yoga class, we’re all looking for a little more of it.

In terms of planning for the future, have you thought about ways to balance your retirement portfolio? These 3 practical tips will make sure you’re not putting all your financial eggs in one basket:

1

 

Take advantage of employer offered programs. Many employers not only offer retirement savings programs like 401(k)s, but many will match a certain percentage of your contributions. Not participating in this program is like leaving money on the table. It’s important to balance more risky decisions with reliable ones like a retirement savings program.

 

2

Not relying only on Social Security. It’s no secret that Americans are questioning the future of Social Security. The problem, however, is that 2 out of 5 boomers think they will get more money from Social Security than the average monthly payment, according to a recent study conducted by the IALC.  Social Security might not be enough to get you through retirement comfortably, so it’s crucial to remember to supplement with other retirement products.

 

7-21-19

 

Look into other balancing options. As you balance the risk in your retirement portfolio, consider a fixed indexed annuity. These products offer low risk, guaranteed income and protection for market ups and downs.

 

 

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Retirement Savings Resolutions for the New Year

While getting your health into shape tops many Americans’ New Year’s resolution list, getting your finances in shape should be another goal you make in the New Year.  Why is this so important? A recent study  showed that nearly 40 percent of Americans don’t have any retirement savings.  That’s a big deal. This year, consider making a Retirement Resolution.

Here are a few simple tips for helping you stay on track:

  1. Set short term goals. Instead of thinking of a total amount you’ll need saved by the time you retire, start small.  For example, set aside $30 a week rather than $30,000.00 in a year. While it might not seem like a lot, a little can add up fast.
  2. Change your date night. Instead of going out to eat every Friday night, try making dinner at home twice a month instead. The money you save on going out to restaurants can be put directly into your retirement account.
  3. Set up Automatic Payments. It’s easy to say you’re going to diet, but following through with a diet is harder. It can be the same with savings. Here’s an easy tip: set up automatic transfers each month so you won’t be tempted to spend that savings on something else.
  4. Add to your retirement portfolio. While investing in a 401(k) is a great start to a retirement portfolio, don’t put all your eggs into one basket. This New Year’s think about adding other options like a Fixed Indexed Annuity to balance your portfolio.

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The Top 5 FIA Articles from 2016

2016 was another great year for Fixed Indexed Annuities (FIAs). In fact, several quarters saw record-breaking sales as consumers recognize the benefits and balance FIAs can provide to a retirement portfolio. During 2016, LifeHealthPro, MarketWatch and Huffington Post all identified how FIAs are attractive retirement products for retirees.

Check out the top articles on FIAs from 2016:

LifeHealthPro: Offer FIAs to take advantage of retirement income opportunities

“Jim Poolman, executive director of the Indexed Annuity Leadership Council (IALC), said that Gen X and Gen Y in particular aren’t sure what kind of guaranteed income they’ll get at retirement.

“We’re working to educate those folks that putting money into a FIA product as part of the safer portion of the retirement plan can guarantee their income during retirement,” Poolman said.”

TIME: 11 Money Lies to Stop Telling Yourself

“While a 401k is a great start to a retirement portfolio, it likely won’t be enough for retirement and will need to be supplemented with another product.

“There’s been a shift from pension funds to retirement accounts, with employees now in the driver’s seat,” said Jim Poolman, executive director of the Indexed Annuity Leadership Council. “The responsibility to choose strategies and mitigate risks while saving for retirement is now mostly falling to the employee.”

Investing in a 401k is simple, and the employer contribution is a huge bonus, but in order to meet your retirement goals and keep that money safe, you need to diversify your savings strategy.

“Savers should protect themselves from market risk and protect the value of their nest eggs while maintaining a varied portfolio,” said Poolman. “Diversity is important when it comes to retirement savings because it can actually help to reduce risk and improve return.”

According to Poolman, an easy way to balance out your retirement portfolio is to take advantage of a conservative product, like a fixed annuity, which guarantees a certain income during retirement, even if the market fluctuates.”

GoBankingRates: 20 Things You Can Learn From Your Parents’ Retirement

 “Many retirees were planning on relying on just one retirement income stream, which turned out to be a bust when once-considered low-risk pension plans started to dry up a few decades ago.

Today’s workers, even though few have access to a pension plan, can still learn from that lesson by casting a wide net and creating a strategy that includes more than just a 401k payout. Retirement savings diversity can help reduce risk and improve return, according to information available on the U.S. Department of Labor website.

One suggestion, said Poolman, is “combining traditional savings vehicles like a 401k with low-risk options such as fixed-indexed annuities, which will help keep you financially healthy and on track to a happy retirement.”

MarketWatch: Why fixed indexed annuities are strong sellers

“This caveat notwithstanding, many prospective annuity buyers should take a hard look at FIAs. It’s no coincidence that their sales were up 22% in the third quarter of 2015, while annuity sales overall rose only 3%. FIAs are the right product at the right time for many pre-retirees and retirees because at least they provide some equity exposure with no downside risk. In addition, they offer income protection through riders with relatively generous lifetime income payments.”

Huffington Post: Why Retirees Should Consider Indexed Annuities

“Simply put: slow and steady wins the race when it comes to retirement. Also, can retirees really bear another market plunge like 2008, when assets faced almost a 50 percent decrease in value?

Retirees have long regarded indexed annuities (also known as equity index, fixed index or fixed indexed annuities) as a risk management financial strategy. They are lifetime streams of guaranteed, fixed income with added insulation against volatile market conditions.”

 

 

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A Retirement Recipe to Try this Thanksgiving

This Thanksgiving, consider throwing a new recipe onto your menu. Ingredients like contributions to an employer sponsored 401(k) program or to fixed indexed annuities can create a deliciously balanced portfolio that can keep you and your family financially full for many Thanksgivings to come.

Check out this Thanksgiving Retirement Recipe from the IALC:

Succulent Savings
Serves: You and your family
Nutritional Information: Guarantees are dependent upon the claims-paying ability of the issuing company.

Instructions:

Step 1: Measure your spending.  Begin by identifying all your expenses, including lifestyle, healthcare, etc. and create a budget. Be sure to include a healthy splash of saving for retirement in your monthly reoccurring expenses. This ensures that you are putting something toward your retirement savings each and every month.

 Step 2: Combine your employer’s retirement plan to the mixture. Check whether your employer offers savings options like a 401(k), and if they’re willing to match it. Money you allocate to your 401(k) will come from your paycheck, and go directly into the savings pot. (Note: Any money your employer will match is kind of like baking soda– you add a little and with time, you’ll see it grow.)

 Step 3: Bake in a fixed indexed annuity. The featured ingredient, fixed indexed annuities, or FIAs, can help to balance the flavors of your portfolio, while providing guaranteed lifetime income in retirement.

Step 4: Dig in! Enjoy your Thanksgiving with family and friends and feel confident that your retirement savings strategy will be hearty and satisfying for years to come.

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