Six Sources of Retirement Income that Women Need to Optimize More Than Men

In last week’s post, I shared the 5 Reasons Women Need to Save More for Retirement than Men. (See video below for a quick refresher.) This week I want to continue by unpacking the six most common sources of retirement income and how women, even more so than men, need to maximize each of them. Here are the six basic sources:

1. Social Security

The good news about social security is that if you delay taking it, you can get more money. The challenge is in calculating the optimum lifespan at which the delay makes sense as well as in what to do if you need the income sooner.  The social security decision is the single biggest finical decision most women can make.  That’s because it accounts for such a large part of the baby boomers’ monthly retirement income and because women will live longer than men.  The decision to delay is easier if the woman is both married and the lower wage earner; then to have the higher wage earner delay is better in almost all cases–bigger benefit, bigger cost of living increase, and bigger spousal benefit should her spouse pre-decease her.

You can learn more and get an estimate of your retirement benefits at each age between 62 and 70: Here

  • Who Receives Social Security?
  • How Do You Qualify for Benefits?
  • What Is Your Full Retirement Age?
  • Claiming Your Benefits
  • Collecting Your Benefit
  • How Much Can I Increase My Benefits?

2. Housing Wealth

There is absolutely no question that home equity can bolster retirement security: by selling a home and adding the proceeds to a nest egg, tapping equity through a line of credit or reverse mortgage, or simply paying off the mortgage and living in the home, thereby, reducing the amount of income needed to cover expenses during retirement. If you have followed this blog, you know that this is where I spend the majority of my energy. The newly restructured Reverse Mortgage is an absolutely essential piece of the Retirement Income puzzle and must be included in any serious planning conversation.

Because women live longer than men and because the housing resource is the single greatest source of Wealth and Worry, women need to been keenly aware of how Reverse Mortgages can help their retirement outcomes later in life, after the death of their spouse, or if a unexpected divorce occurs.

Click Here to Download Related Article: 18 Risks in Retirement

3. Employer-Sponsored Retirement Plans

The move away from working 40 years, receiving a gold watch and a lifetime income payout in the form of a pension has declined tremendously (see below). The primary employer sponsored plan is no longer the defined benefit Pension, but rather the Defined Contribution plans, i.e., 401K, 403B.  This shift has put the sole burden of saving for retirement on the employee.  The fact is that though participation rates have increased, the savings rates have not necessarily kept up.  Taking advantage of tax advantaged growth is essential, especially if the company does some form of matching. Because women are paid less than men and have spent less time in the workforce, making full use of these employer sponsored plans is critical.

4.  Individual Retirement Accounts

An Individual Retirement Account (IRA) is an account set up at a financial institution that allows an individual to save for retirement with tax-free growth, or on a tax-deferred basis. There are three basic types:

  • Traditional IRA: You make contributions with money you may be able to deduct on your tax return, and any earnings can potentially grow tax-deferred until you withdraw them in retirement. Many retirees also find themselves in a lower tax bracket than they were in pre-retirement, so the tax-deferral means the money may be taxed at a lower rate.
  • Roth IRA: You make contributions with the money you’ve already paid taxes on (after-tax), and your money may potentially grow tax-free, with tax-free withdrawals in retirement, provided certain conditions are met.
  • Rollover IRA: A Traditional IRA intended for money “rolled over” from a qualified retirement plan. Rollovers involve moving eligible assets from an employer-sponsored plan, such as a 401(k) or 403(b), into an IRA

5. Other Assets

Many thought leaders suggest that it is this last category where money for the joy in retirement will come from. These are other savings vehicles such as personal investments, second homes, and businesses.  These represent the wise, savvy and discretionary investments that allow a retire to enjoy retirement and not just survive it.

6. Employment

Half or more of all U.S. workers retire earlier than they had planned. The Retirement Confidence Survey from the Employee Benefit Research Institute (EBRI) reports that nearly one out of two — 49 percent — of retirees left the workforce earlier than they had planned, but why?

  • 61 percent cited health reasons
  • 18 percent cited changes at their company, such as downsizing or layoffs
  • 18 percent needed to care for a spouse or family member
  • 7 percent said the skills needed for their job changed

Last week I heard a popular TV financial pundit say we all need to understand that 70 is the NEW retirement age.  Women must be prepared to work longer, go back to work, or even work part time in order to have a successful retirement.


Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®
Don Graves, RICP® is a Retirement Income Certified Professional and one of the Nation’s Leading Educators on the Emerging Role of Reverse Mortgages in Retirement Income Planning. He is president and founder of the HECM Institute for Housing Wealth Studies and an adjunct professor of Retirement Income at The American College of Financial Services. He has helped tens of thousands of Advisors as well as more than 3,000 personal clients since the year 2000
Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®
Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®

Categories: Advisors


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