Mother's financial planning Iowa

This Mother’s Day, Give the Gift of Retirement Security

While we’re sure mom LOVES flowers and chocolates on Mother’s Day, the unconventional gift of a retirement plan could be the gift she’s always wanted – and needed.

Our mothers do so much for us without us even knowing. American moms oversee housework, child care, elder care, cooking, problem solving, scheduling appointments, and anything else that happens to fall through the cracks during the other 364 days of the year. 

While we understand that a talk around Roth IRAs and vs Traditional IRAs isn’t the ideal way to spend Mother’s Day brunch, helping support and set up a solid retirement plan is the gift that keeps on giving.

Because our mothers play a pivotal but invisible part in our nation’s economy, we need to start fully recognizing them for their contributions. This year, instead of gifting your mom a gift voucher or sweet smelling candle, give her something she will take advantage of.  Here’s how you can give your mom the gift of Retirement security.

Retirement Facts for Women

Unfortunately, older women are typically in a more precarious financial position than men — thanks to a variety of demographic and economic factors. On average, women live longer than men, meaning they must stretch their retirement dollars further. 

In addition, women have been less able than men to save for retirement because of unequal pay. In 2020, women in Iowa earned 83.7% of what men earn when all other factors are equal. The women’s-to-men’s earnings ratio was 80.3 percent in 2019. Nationwide, women earned $891 per week, or 82.3 percent of the $1,082 median for men.

Lower lifetime earnings lead to lower retirement wealth. The most important link is through Social Security, which provides over half of family income to 52 percent of the elderly and at least 90 percent of income to 25 percent of the elderly. 

How Women Can Reach Retirement Security

Knowledge truly is power. Once you know what kind of forces are working towards you it can help you look forward to the ways you can work around things such as unequal pay gaps. Although gender inequality is a pervasive problem with deep cultural roots, narrow economic policies can help reduce disparities between men and women.

But fixing a retirement system that was not designed to accommodate women’s experiences will require significant changes, not just in retirement policy but in labor market practices and policies as well. Here are 3 tips mom can do to help reach a safer retirement.

  1. Try to Maximize Mom’s Social Security Income

Try to help maximize Social Security benefits for mom and her spouse. You can start by knowing which of the many separate claiming strategies for married couples is right for her. The SSA calculates your benefit amount based on your earnings, so the more you earn, the higher her benefit amount will be. Our top recommendations for helping her maximize Social Security include:

  • Delay Claiming Social Security Benefits
  • Work for at Least 35 Years
  • Collect Spousal Benefits
  • Apply for Social Security Survivor Benefits
  • Avoid the Social Security Tax

Bonus tip: She can also boost her Social Security payments by correcting any previous errors.

  1. Create a Retirement Income Plan

Retirement planning doesn’t have to be complicated. The key is to have a written or digital plan that works for her.

Once you know what mom wants to achieve, your next step is to determine if she’s on track to reach her goals. Use our retirement savings calculator to find out. In addition to her goals and savings, our calculators will take into account other income you might have during retirement, like Social Security, a pension, rental income or an annuity.

Next, create a list of fixed sources for her retirement income. This will help mom spot where she needs to make changes in order to help maximize her income. Add columns for each source of fixed income such as:

  • Her Social Security/Your Spouse’s Social Security
  • Pensions for both spouses
  • Annuity Income
  • Earnings and other streams of income
  • Expenses including taxes

Once these numbers are in place, putting her retirement money in the right place is just as important as knowing how much to save. Don’t forget about these valuable savings areas:

  • Use a Health Savings Account (HSA) to put money away for future health care costs, if she’s eligible.
  • If she’s maxed out her employer-sponsored account or doesn’t have one, consider a traditional or Roth IRA to boost her savings.
  • If mom has maxed out her IRA,  consider a brokerage account to help save even more.
  • For more help with her retirement plan or portfolio, consider working with a Fiduciary financial planner.
  1. Stay Up to Date on Estate Planning

Having both a proper estate plan and life insurance coverage helps ensure that mom’s assets are distributed in a manner of her choosing and that loved ones will not experience financial hardship following her passing.

A good plan should be designed to help avoid probate, save on estate taxes, help protect assets if she needs to move into a nursing home, and appoint someone to act for her if she becomes disabled. A lot of times people assume they can simply download a document online, when in reality, it’s more complex than meets the eye.

To help avoid family confusion, stress and conflict after her passing, first begin by gathering the following documents for your Fiduciary:

  • List of all bank accounts, investment accounts, credit card information
  • A copy of her will, living will, power of attorney and other estate planning documents
  • A list of her debts (Mortgage, lines of credit, loans)
  • A list of income streams (Life insurance, pensions, annuities)
  • Digital Assets ( Computers/Mobile devices, passwords to bank accounts, email/social media, and any online subscriptions.

Armed with this base information, we/your chosen Fiduciary can get a better understanding of her financial picture and create a custom estate plan to address her specific needs.

How Johnson Wealth Income Management Can Help

Generally speaking, women face a variety of different challenges when it comes to building a secure retirement. With enough planning and preparation, those challenges don’t have to be roadblocks. This Mother’s Day, give your mom the gift of knowledge and set her up with the trusted Financial advisors at Johnson Wealth Income Management.

If you want professional guidance to help her make your best retirement plan or choose products that will strengthen her investment mix, contact us today. We’ll work with her to understand her goals and priorities, and develop a strategy to help her achieve her best results.

Wishing all the moms a very Happy Mother’s Day !

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