Retirement tips for women
"The first thing I say to clients is, 'What do
you want to do (when you retire)?' And how do you put that plan
into action so it can be a reality?" says Tina Tehranchian,
a CFP and branch manager of Assante Capital Management Ltd., in
Richmond Hill, Ont.
It's important to build some flexibility into your
plan. "What things might happen that might make you unsuccessful
with this plan?" asks Kim Pearson, a financial planner for
Investors Group in Sussex, New Brunswick. No one likes thinking
about the road blocks they might encounter along the way, but it's
better to plan for them so as not to derail your retirement dreams.
Once you have a plan in place, you can determine how much risk you need to expose your investment money to in order to get there.
Take some risk
"Women are more conservative than men when it comes to investments," says Tehranchian. "Generally, they are a lot more cautious and that means they will end up investing in instruments that have a considerably lower rate of return."
Instead of safeguarding money in a savings account,
a Guaranteed Income Certificate (GIC) or a low yielding bond, Tehranchian
suggests women aim for a higher return by investing in a diversified
portfolio that includes higher yielding investments such as blue
Blue chips stocks are investments in companies or banks that are the least likely to go bankrupt; they are well-established icons in their industries and typically have healthy growth. She says women should also look at high-grade bonds for high returns.
In the short term, squeezing another one or two percent out of your investments won't make a huge difference, but spread over 30 years or more, that little bit extra can make a huge difference, says Tehranchian. The extra return can help compensate for time taken off to care for children.
Another retirement savings option is an employer's private pension plan. These pensions can contribute significantly to a woman's overall retirement over the course of her career. The downside is the savings stop when women take time off work to raise children.
But Sherwood says women still have the option of contributing to their pension then and should ask their employers for a buy back option. "Basically, this allows them to buy back a specific number of years of service, which will increase their retirement pension."