The Gender Gap
PLANNING AHEAD FOR YOUR FINANCIAL FUTURE
Women face unique challenges
Longer lives. On average, women live six years longer than men.
Lower earnings. According to the Women’s Institute for a Secure Retirement, women average 73 cents for every $1 earned by men.
Less time in the workforce. Typically, it is women who leave the workforce, either full or part-time, to care for children or ailing parents. When it comes to retirement benefits, leaving the workforce can be costly.
Fewer retirement benefits. A study by the Women’s Institute for a Secure Retirement says women receive about 50% as much pension income as do men. Although married women may qualify under their husband’s Social Security or pension plan, it’s important to be aware that these benefits can dramatically decrease if the husband predeceases his wife.
Often financially on their own. The Securities Industry Association estimates that on average, a woman today will spend more of her adult life unmarried than married — the consequences of later marriages, more divorce and widowhood.
More and more women are taking steps to protect their financial futures. Today, there are 37 million women investors in the United States.
Important steps you can take
Think of retirement as a period of time, not a point in time. Plan accordingly. Even if you are approaching retirement age or have already reached it, keep in mind that with increasing life expectancies, you may spend as many years in retirement as you did working.
Take a long-term view. To project your potential retirement expenses, take a look at your life today, and think about how you expect to live after retirement. While some of your current costs will go down, you’ll need to think about the ones that may increase, such as medical costs.
Seek out professional advice. A financial professional can help you define your goals and determine which investments are most appropriate for your needs. A professional can also help you create a retirement strategy.
Understand your investment options. There are many types of investments available to you. What’s right for you will depend on your goals, feelings about risk and length of time to invest. Also consider which investments will work best for you when you are ready to begin taking retirement income.
Important steps you can take
Be tax-smart. Taxes can have a huge impact on how an investment grows. Consider including investments such as a variable annuity, which offers tax-deferred growth. This allows any earnings to compound tax-deferred, year after year. You don’t pay taxes on the growth until you take withdrawals or until other distributions are made. However, be aware that withdrawals taken before 59 1/2 may also be subject to a 10% federal tax penalty.
Consider inflation’s impact. Over the last 75 years, it averaged 3.1%. Assuming this average continues, you would need almost twice as much income in 20 years if you retired today just to maintain your current standard of living.
Create a retirement strategy that makes sense for you and stick with it. After you determine your strategy, the most important thing you can do is invest regularly and rebalance your investment allocations when appropriate. When you make regular additions to your investments, time and the power of compounding (earnings earned on earnings) give them the potential to make a big difference in your long-term retirement strategy.
Sources: U.S. Census Bureau, International Data Base, 2002; "Top 5 Reasons Why Retirement is a Challenge for Women Workers," Women’s Institute for a Secure Retirement, July 2002. Securities Industry Association (SIA) Investor, 2002. NBC News, 2000., U.S. Inflation, Ibbotson Associates, 2002.
Ask your registered representative or call Pacific Life at (800) 722-2333 for prospectuses with more complete information about Pacific Life variable annuities, including charges, limitations and expenses. Read them carefully before investing or sending money. Variable annuities are long-term investments designed for retirement. Withdrawals and other distributions of taxable amounts will be subject to ordinary income tax, and if taken prior to age 591/2, a 10% federal tax penalty may apply. A withdrawal charge may also apply. Withdrawals will reduce the value of the death benefit and any optional benefits. Past performance does not guarantee future results. Neither Pacific Life nor its representatives offer tax or legal advice. Pacific Life Insurance Company is licensed to solicit individual life insurance and annuity products in all states except New York. Product availability and features may vary by state. Variable annuities issued by Pacific Life Insurance Company are distributed by Pacific Select Distributors, Inc. (member FINRA & SIPC), a subsidiary of Pacific Life, and are available through licensed third party broker/dealers.
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