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Kiplinger: The Rules of Retirement for Women

Maximize your own retirement benefits.

If you’re looking for a new job, make sure it has a good retirement plan. It’s unlikely these days that you will find a job with a pension plan that guarantees a stream of income in retirement. But you can seek out employers that will match all or part of your contributions to a 401(k) or a similar employer-based plan. A company match is free money.

Even when married women are working, women tend to set aside a smaller amount of their income than men, says Suzanna de Baca, vice-president of retirement and wealth strategies at Ameriprise Financial Services. “The couple may decide that the woman’s income is more discretionary,” she says. “But any woman who is working should contribute as much as possible to an employer-sponsored retirement plan.” If her employer doesn’t offer a retirement plan, de Baca says, she should set up an IRA.

Indeed, Kelly O'Donnell, vice-president at Financial Engines, which provides asset management for 401(k) plans, told the U.S. Senate Special Committee on Aging at a recent hearing that men tend to save nearly twice as much as women. "Among our clients, the median 401(k) account balance for men age 60 and older is $82,000 and only $46,000 for women age 60 and older," O'Donnell said.

In 2012, you can set aside up to $17,000 (plus up to $5,500 in “catch-up” contributions if you’re 50 or older) in a 401(k). If you’re self-employed, you can make deductible contributions to a retirement plan, too, such as an individual 401(k). If you don’t have access to an employment-based retirement plan, you can make $5,000 ($6,000 if you’re 50 or older) in deductible contributions to a traditional IRA, or you make the same amount of after-tax contributions to a Roth IRA, which grows tax-free.

Working longer can help maximize your Social Security benefits. The Social Security Administration uses your highest 35 years of earnings to calculate your benefit. Any zeros -- perhaps for years you left the workforce to care for children -- will pull down the average. If you keep working, you’ll be able to raise your benefit -- and maybe knock out a zero or two.

If you’re married but not working, you can still contribute to a tax-advantaged retirement account, known as a spousal IRA. In 2012, a nonworking spouse can make a deductible IRA contribution as long as the couple file a joint return. Also, the working spouse must have enough earned income to cover the contribution.


More From Kiplinger:
10 Great U.S. Cities for Retirees
5 Costly Retirement Surprises
10 Things You Must Know About Social Security

The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.

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