Studies show women make better investors than men, but you wouldn’t know that looking at women’s retirement accounts. On average, men contributed about 22% more to individual retirement accounts of all types in 2014 than women, according to recent estimates from the IRS. Blame the pay gap that manifests itself as a retirement gap. This is an especially important lesson for women: A recent NerdWallet study found that to build a comparable retirement fund, the average American woman must invest the equivalent of $1.25 from her wages for every $1 the average man invests. Where can women begin? For instance, a person who saves $5,500 in a Roth IRA each year from age 28 to 67 will garner more than $150,000 in additional retirement savings compared with a saver who invests $4,500 annually over the same period. Experiment with the NerdWallet Roth IRA calculator to simulate how different contributions can affect your balance at retirement. Reject indecision Hemming and hawing about how to start investing for retirement will get you nowhere. Like most of the IRA statistics collected by the IRS, women lagged behind men in doing Roth conversions. A smaller share of women than men did these in 2014, and the average amount converted — about $13,500 — was almost $6,000 less than that of men.
Nobody heads into retirement with aspirations of filing bankruptcy, becoming dependent on family and friends, or asking “why me.” Unfortunately, some people end up in the poor house for a number of reasons.
One of the fastest ways to go broke in retirement is from medical bills. I learned this several years ago when I was an approved bankruptcy counselor. Basically, there was a requirement in my home state that anyone filing bankruptcy had to take a financial management course.
I set up my program with the expectation of being a light for young people who had made some bad financial decisions. However, I was horrified when my primary audience turned out to be retirees who couldn’t afford their medical bills. They were not only in bad physical shape, but no amount of financial counseling and budgeting would have or could have changed what happened to them.
In fact, A 2015 Harvard University study showed that medical expenses account for approximately 62% of personal bankruptcies in the US. To make matters worse, studies indicate that seniors are the fastest growing demographic in bankruptcy filings and a whopping 72% of those who filed due to medical expenses had some type of health insurance.
That makes it more important than ever for people approaching retirement to avoid putting off or delaying their plans to start eating better, establishing that exercise routine, and dropping a bad habit.
Another way to end up broke in retirement is through financial abuse and fraud. Senior and retiree fraud always seems to be on the rise. The FBI points out why: