By Greg Lohr, MBA and Ethan Lohr, CFP®
Between longer life expectancy, (1) lower marriage rates, (2) and consistently high divorce rates, (3) it’s estimated that 80% of women will end up alone. (4) That means it’s never been more important for women to start taking control of their financial life.
So how can you make sure your financial future is secure? Planning for retirement is about much more than just achieving a specific number in your bank account; it includes shoring up a spending plan, creating a withdrawal strategy, and planning for healthcare, long-term care, and gifting.
You can find general retirement advice anywhere, but much of what you hear or read applies to married couples. Your situation is unique and will require personalized solutions and big-picture financial coordination and management to ensure your future stays secure.
Create a Retirement Budget
Regardless of the resources you have available to you, you need a budget both now and in retirement. Since you don’t have two incomes, two retirement plans, and two Social Security benefits as married women do, you need to make sure your expenses are in check so your ideal lifestyle is secure for the long term.
Map out (in detail) your essential and non-essential expenses and income sources, then create a monthly and yearly cash-flow plan and automate your savings. Having a budget doesn’t mean saying no to everything you want, but it does help keep your spending under control, maximize the money available to you in retirement, and minimize debt.
Less debt in retirement means more flexibility with your money. Regardless of the type of debt you carry, the more interest you pay and the higher your monthly payments, the less you’ll have to do what you want.
Credit cards, car loans, and even secured debt like mortgages have an interest rate that is working against your net worth. If you have a credit card that is hitting you for 22.99% APR, then your retirement account that is worth the same amount giving you an 8% return is still way behind. Make clearing out your debts a priority, and you will find wealth-building a much easier task!
Set Up a Withdrawal Plan
Just because you’ve worked hard to save for retirement and build up a nest egg doesn’t mean you can rest easy. Once you start tapping into your savings, you need to develop a strategy to withdraw your funds so they last the rest of your life, however long that may be.
Your retirement accounts are all taxed differently. If you don’t have a strategic withdrawal plan in place, you could end up with a large tax bill at the end of the year. For example, a $50,000 withdrawal from a Roth IRA will have a wildly different tax impact than that same distribution from a traditional IRA. If you blindly take your money and run, you could trigger an avalanche of higher Social Security taxes, investment surtax, capital gains taxes, and even higher Medicare premiums, which will eat away at the funds that were supposed to carry you through retirement. Creating a tax plan can help you strategically withdraw from your various retirement accounts and minimize your tax liability.
Since there is no simple, one-size-fits-all plan, you need to figure out what will work for you and your unique situation, taking various factors into account: time horizon, risk tolerance, asset allocation, and unexpected living expenses.
Build a Relationship With Your Financial Advisor
Finances can be overwhelming, especially if you’ve experienced a major life transition such as divorce or the death of a spouse. In these situations, it’s common for women to have no idea what’s going on with their finances and no one to turn to. Even in the 21st century, with all the strides women have made in society, 50% of married women let their husbands handle all the investment decisions even though the majority of them would feel more financially confident if something were to happen to their husband. (5)
Having a trusted financial advisor at your side to walk you through both the major and the minor decisions can make all the difference in your financial future. Your advisor can help you build a strong foundation and also keep you on track as life goes on.
Start Today for a Stronger Future
Traditionally, the world of finance has been a space dominated by men, but that is starting to change. There are plenty of women out there taking action and achieving financial freedom and security on their own. We have dedicated our careers to helping women learn successful retirement strategies and navigate their unique life situations. The financial decisions you make today can have a lasting impact for decades to come.
If you’d like to partner with a financial planner who understands your unique needs and inspires you to be more confident in your financial decisions, schedule a complimentary introductory meeting online or reach out to us at 434-260-6742.
Greg Lohr founded Lohr & Company, a multi-generational financial advisory firm, in 1993 to help more people plan for a rewarding, well-deserved retirement. Before he entered the financial services industry, he worked as an electrical engineer. But after spending a few years as an engineer, he decided to follow his heart and return to school for an MBA in finance from the College of William & Mary. Although he originally entered the finance industry because he was excited about the personal opportunities, it was the satisfaction of seeing people at peace with their money that has kept him here for his entire career. He is passionate about building lifelong relationships with his clients and walking with them as they navigate financial decisions and milestones.
When he isn’t working, Greg enjoys spending time with his beautiful wife and their adult children. In addition to managing their family farms, Greg and his wife also manage a growing Airbnb venue. In the cold weather months, you can find Greg hunting whitetail deer in the breathtaking Virginia landscapes. To learn more about Greg, connect with him on LinkedIn.
Ethan Lohr always knew his dream was to follow in his father’s footsteps and carry out his same mission: to help more people find financial peace and security in retirement. Ethan started practicing for his future career quite early, at the age of 6, advising his sisters on their savings with the help of his trusty calculator. But it wasn’t until he graduated from James Madison University that he truly began developing his talent as a financial advisor at Lohr & Company. Ethan is a CERTIFIED FINANCIAL PLANNER™ professional.
Ethan is most fulfilled when he’s helping clients develop a sound plan and then executing that plan. He knows that pre-retirees often have many unanswered questions and may be feeling trepidation about retirement—and rightfully so. Retirement is one of life’s greatest transitions and Ethan knows how important it is to get everything right the first time. He works to ease his clients’ fears, provide them with confidence, and help them take the necessary actions to move forward.
When he isn’t serving clients, Ethan enjoys spending time with his wife and two sons. You can also find him practicing his swing on the golf course, exercising, and hunting with his dad. To learn more about Ethan, connect with him on LinkedIn.
Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Advisor. Fixed insurance products and services offered through Lohr & Company, LLC or CES Insurance Agency.