Life is filled with special milestones.
Starting a career and maybe growing a family.
Moving to a new city. Launching a business. Or traveling.
Sure, there are bumps along the way—maybe an unexpected career change, sickness or divorce.
The pinnacle season of life we all long for is retirement. The time – and the freedom – to enjoy the rewards of hard work through the years.
While life’s journey is unique to everyone, this is certain: financial preparedness is critical to navigate the challenges and opportunities to build, protect and grow personal wealth.
Regions Private Wealth Management serves a diverse range of clients. And over the years, our experience has shown that more women clients are leading their household’s financial management strategies. So our work includes special insights designed to help women with tailored strategies for their retirement goals. Through curated content and skilled guidance for every phase and aspect of women’s lives, the team works to understand the unique needs of women and help them develop a financial plan for life.
Leslie Carter-Prall, head of Regions Private Wealth Management, says the preparedness aspect is what her team of advisors do well for the clients they serve.
“At Regions, our advisors are seasoned leaders deeply committed to delivering the attention to detail and tailored insights our clients value,” Carter-Prall said. “Starting early to plan for retirement is important, but there are steps to take at each stage of life that can help women move toward reaching their retirement goals. Life moves incredibly fast, but having the right support from a financial advisor along the way, women can reach retirement with a strong wealth strategy in place.”
Build Investing Confidence in Your 20’s and 30’s.
Women in their 20s and 30s have the longest time horizon with investments, so setting aside money early, even before there is any accumulated wealth, is important.
- Take advantage of employer-matching 401(k).
A defined contribution plan is one of the primary benefits women starting careers can use to jumpstart their wealth journey. Terms of a 401(k) plan vary by employers, but many offer some form of matching, oftentimes ranging from 4.5% to 7% of salary, that should be utilized.
“This is free money that provides an immediate return on investment. The sooner people start accumulating the match, the faster their money will grow,” said Jennifer Wilson, Trust Advisor at Regions Bank.
- Consider assets that will appreciate.
Starting out, owning a home may seem out of reach. But, when you consider the cost of renting that provides no return, purchasing a home that will likely appreciate is a good option for a long-term investment strategy.
“Owing a home is a great way to build net worth. It’s one of those subtle ways wealth accumulates in the different corners of life, like property and a 401(k), that can build momentum,” said Olivia Wiggins, Trust Advisor for Regions Bank.
A budget is an important part of the financial journey at every stage of life. Consider the 50-30-20 rule to create a budget using after-tax income. Spend 50% of income on needs, 30% on wants and put 20% in savings and investments. A budget can help prevent overspending once the first paychecks arrive.
“Find a way to live within your means, avoiding debt where possible,” Wilson said. “A budget helps you remain in control where money flows and can keep women on track with their savings.”Wiggins agreed adding, “Building wealth versus spending wealth in the moment is one of the biggest opportunities young women have to gain financial security down the road,” she said.
Managing Mid-Career Wealth Strategies
The peak earning years likely come during the 40s and 50s where women are managing increased job responsibilities, supporting their household and thinking ahead to retirement. It is also a turning point from wealth accumulation to wealth preservation. Here are three things to help in the transition.
While it may seem easier to self-manage investments in the early years, as women age and their income increases, a financial advisor is a key resource to evaluate risk tolerance and keep retirement goals on track.
“This is the age where women must look at how much they contribute outside of their 401(k). Review taxable investment accounts and make sure enough is being set aside for later,” Wilson said.
Net worth is a key indicator of financial health and stability. Compile assets (house, retirement, savings accounts, etc.) and subtract the liabilities (mortgage, credit card debt, auto loans, etc.). The remainder is net worth.
“This is a good time to calculate net worth because it is likely women have paid off debts, like college loans and credit card debt, and have more assets to consider,” said Wilson “With a growing net worth comes an increasing ability to set more money aside for retirement.”
- Consider a catch-up provision.
At age 50, the IRS allows catch-up provisions to make additional contributions to a 401(k) plan. The catch-up contribution limit for 2023 and 2024 is $7,500, in addition to the annual contribution limit.
“If women didn’t start investing early in a 401(k), they can catch up. Taking advantage of this option helps increase savings and inch closer to meeting retirement goals,” Wilson said.
Reaching Retirement
As women reach retirement, likely within a five-year window of a targeted retirement date, the relationship with an advisor becomes even more important.
“The biggest question I get from women ready to retire is, ‘Do I have enough money to retire?’
How they have strategically prepared up to that point along with a clear picture of their goals for the future will help answer that question,” Wiggins said. “Still, there are things to do as earning income stops.”
- Have a Financial Plan for Retirement.
It is important to project financial goals for retirement, so Wiggins recommends clients assess debt remaining, review retirement goals, consider family contributions that will be continued in retirement, etc., to ensure there is enough accumulated wealth to meet the needs.
“The goal is to make sure this money will last for the remainder of life, as well as any desired legacy for their family or heirs,” Wiggins said. “That is where a retirement plan can provide women a holistic view of financial investments and retirement benefits available to meet their financial objectives.”
Estate plans are important throughout all stages of life, but it should be reviewed and updated at retirement to make sure plans are in place for sickness or death. Have a will, update health care declarations, and ensure someone trustworthy knows where important documents are, like passwords, account numbers, insurance policies and more.
“One of the most difficult estate planning decisions is determining when and how to involve a family in planning discussions,” Wiggins shared. “Starting a dialogue reduces the potential for future discord when a plan is implemented, and it leaves women with a sense of relief that their wishes are known.”
For more resources on retirement planning, be sure to visit Regions Women + Wealth resource library.
This information is general in nature and is not intended to be legal, tax, or financial advice. Although Regions believes this information to be accurate, it cannot ensure that it will remain up to date. Statements or opinions of individuals referenced herein are their own—not Regions’. Consult an appropriate professional concerning your specific situation and irs.gov for current tax rules. Investing in securities involves risk, including the risk of loss. This information should not be construed as a recommendation or suggestion as to the advisability of acquiring, holding or disposing of a particular investment, nor should it be construed as a suggestion or indication that the particular investment or investment course of action described herein is appropriate for any specific investor. In providing this communication, Regions is not undertaking to provide impartial investment advice or to give advice in a fiduciary capacity.
