The financial world has seen a lot of change, with more women employed in male-dominated industries. This means that women are more independent today than ever before. Despite these achievements, women face many challenges as they approach retirement age.

Financial planning for women is essential as they approach retirement since retirement is when there is less income than spending. Therefore, proper planning should be considered.

Retirement planning is essential for women, and today, there are many ways in which women can invest and diversify their income to ensure that when they retire, they will still have a steady income. They won’t have to depend on their spouses or children for daily expenses.

There are many ways in which women can plan for their retirement. Here is a guide on retirement plans for women.

1. Save more.

As you approach retirement age, you must learn to save more. Women are known to spend more than men. We all know advertising has changed, and we can see it directed toward women. This increases shopping activities that are sometimes aimed at buying the most luxurious things.

Learning how to save more will be very beneficial. Take up the saving rule in which you should save at least 30% of your salary.

If you are used to spending too much on takeout, start preparing your food at home. Savings that do not yield anything are not good. Taking up a savings account with your bank where you can earn a certain amount of money for saving money in your bank account can be very beneficial instead of putting your money in a regular bank account.

When you start saving early, you will realize that by the time you retire, you will have enough money to start a business or enjoy your retirement. Women should consider saving in a savings bank account that yields interest which can increase their savings amount.

2. Emergency fund.

An emergency fund is an essential aspect that you should consider when planning for retirement. Emergency funds are aimed at securing you financially in case you lose a job or in your old age when you run out of cash and you have an emergency that you need to take care of immediately.

Emergency funds should be kept separately from your savings account and used only to handle emergencies that cannot wait. Contributing a certain amount of your income to your emergency fund is very important and should be handled with a lot of discipline. Economists say you should save at least 6 to 18 months’ worth of living expenses in an emergency fund account to cater for emergencies.

You can create an emergency fund bank account that allows you to divert a certain amount of your earnings and use it whenever needed. This will give you a more accessible and more peaceful time since you won’t stress if you are low on funds during retirement.

3. Invest in stocks.

Investing is the best way to prepare for retirement since it will help you make more money even when you are retired. There are many ways of investing. You can invest in stocks earning dividends in which you will be able to earn dividends when the company you have invested in makes profits at the end of the year. There are many companies that offer stocks to the public to buy.

Stocks are sold at the security exchange market. Here you can buy stock when they are low and sell when they are high, or you can decide to wait to earn dividends at the end of the year. Stocks are the most common form of investment that even billionaires use to earn income. Investing in stock is considered to be a low-risk investment since it’s scarce that companies make losses.

The stock investment will ensure that you generate regular income, which is considered passive income. This passive income type is very profitable, and you are assured that the money will keep coming in regularly. Buying stocks before retiring is very beneficial since even as you retire, you will be assured that there will be a steady income.

4. Annuity.

An annuity is an insurance contract in which it’s issued to pay the investor a fixed income in the future of the invested money by the insured. Financial institutions like insurance companies mainly issue annuities. You pay a certain amount of money in terms of premiums or lump sums, and upon retirement, you will earn a specified amount for a certain period for the remainder of your life. Annuities are mainly preferred for retirement since they are less risky, and you are assured of a good life after retirement.

Retirement planning for women is essential. Annuities are one of the best retirement plans for women since annuities will sustain their living expenses and guarantee a steady flow of income. Taxes are associated with annuities that people seeking to get allowances should consider. Getting in touch with a financial institution offering grants for advice on subsidies can benefit you. 

5. Real estate investment.

Real estate investment is the most common option many people are now diving into more than ever. With a high rate of inflation and increased demand for suitable housing, investing in real estate can be very profitable, especially if you want a permanent house in which you can live forever. You can also decide to build your own home and become a landlord in which tenants pay rent. This way, you will have an income stream every month.

Suppose you can’t afford to buy a house or build one. In that case, you can invest in real estate companies where different investors come together and own real estate properties. The profit earned is divided equally among the investors when they sell the property. Women planning to retire should consider this form of investment since it’s very profitable and you are assured of a steady income.

Conclusion.

The retirement plan for women is essential, and women should plan their retirement even before they get into retirement age by saving, buying stocks, and investing in real estate and annuities. Join the financial retirement club for empowered women and plan your retirement better today.

 

Successful American women are now getting ready to prepare their annual tax returns. The number of women-owned
businesses now stands at more than 1.1 million nationwide. Women are producing nearly $2 trillion in sales and employ more than 10 million American workers.

Tax planning is one critical area for women seeking to get ahead. This way, females can keep more of their income generated from self-owned businesses and sales.

Read on to learn tax tips every woman should know about. Explore 7 tax tips for women that are certain to reduce their taxable income this year.

1. Save for Retirement

Far too many Americans are kicking the can down the road on retirement savings. In fact, one in four Americans has nothing in their retirement savings account. An even greater number of people, including women, are not saving enough.

Saving for retirement is sound tax advice. Contributions to your 401k or Individual Retirement Account (IRA) are pre-taxes. This means they are deducted from your pay before federal taxes are calculated.

The end result is that you are lowering your taxable income. Increasing your retirement savings contributions may allow you to qualify for a lower tax bracket if planned correctly. An added benefit is that your savings account is allowed to grow without being held back by taxes.

2. Child and Dependent Care Tax Credits

Caring for your loved ones is one of the greatest challenges that female entrepreneurs and workers deal with. How do you balance caring for your family with career aspirations? For decades, women were forced to put their careers on the back burner so they could stay at home with a child.

In the 1970s, Congress made changes to the tax code to help working families. The child and dependent care tax credit helps women pay expenses incurred while they continue to work.

The American Rescue Plan Act increased the tax credit amount. Now, women can receive a $4,000 tax credit for one qualifying child or dependent. The amount doubles to $8,000 if you have two or more children or dependents.

3. Education Credits

Many women want to get ahead by pursuing an education. In some cases, they were forced to postpone their educational goals for family or other reasons. The good news is that Uncle Sam offers generous education tax credits to help you pay for school.

The American opportunity tax credit (AOTC) is worth $2,500. It can be used for eligible tuition, room and board, and other education-related expenses.

The lifetime learning credit (LLC) provides another $2,000 of tax assistance. There is no limit on how many times you can claim the LLC. You remain eligible so long as you are enrolled in at least one academic period at a higher-education institution.

Congress is aware that these credits are not enough to pay for the totality of student tuition and education-related expenses. Many women need to take out private or public student loans to pay for school. You can deduct your student loan interest as well with a 1098-E form.

4. Deduct Expenses From a Home Office

Many female entrepreneurs are starting businesses from home. Whether they are selling or making products, their home is the primary place of business.

While working from home keeps overhead expenses low, it also has tax advantages. You can deduct expenses from your home office to lower your taxable income.

There is a simplified version of the home office deduction. Here, you can claim a $5 deduction for up to 300 square feet. This means it is a $1,500 deduction.

In the regular version of the deduction, you add up all home expenses. This includes big items like the mortgage and rent. Also, utilities such as electricity and internet are also deductible.

5. Side Hustles

More Americans these days need a side hustle to pay all of their bills. One out of every three Americans is doing a side job right now. However, many women are not thinking about how this extra income affects their taxes.

When you work a job as an independent contractor or freelancer, you do not get a traditional W-2. Instead, you may receive a 1099-MISC to capture your income.

It is important to consider this income when planning your taxes. If you have a more traditional position, you should opt to withhold more in federal taxes on the new W-4 form. This is especially important as you are now responsible for the employer portion of Social Security and Medicare taxes.

6. Medical Expenses

You never know when medical expenses are going to play a significant role in your finances. The good news is that you can deduct medical expenses from your taxable income. If you itemize your taxes, medical expenses that exceed 7.5% of your adjusted gross income are deductible.

Many states, like New Jersey, allow you to deduct all of your medical expenses. Either way, it is good financial advice to save all of your medical receipts.

Along these same lines, many women choose to contribute to a Health Savings Account (HSA). This is a way to shield your money from federal taxes.

You can contribute up to $3600 for an individual or $7200 for a family. The major benefit is that the contributions are pre-taxed which lowers your taxable income.

7. Consider Required Minimum Distributions (RMDs)

For older women, it is necessary to pay attention to their age and IRA. When you turn 72 years old, the IRS requires you to take out RMDs.

This means that you have to withdraw a certain amount of money from your retirement accounts each year. The IRS then taxes these withdrawals. It is important to consider these RMDs when you are doing your retirement planning.

7 Important Tax Tips for Women

There are elements of the U.S. tax code that can help women thrive. Generous programs like the AOTC and child tax credit provide thousands of dollars when you file taxes. You should also increase your retirement savings as they are pre-taxed.

Tax planning is so important as you should have an opportunity to retain your hard-earned income. Knowing about every deduction and tax credit helps improve your annual bottom line.

If you enjoyed this article about 7 important tax tips for women and paying taxes, check out our blog for more great financial advice.

Did you know that 36% of non-retirees have an individual retirement account (IRA)? While many people can benefit from opening one of these retirement accounts, it’s also important to consider the type of IRA you contribute to as well. What are the best IRA plans and how you should get started?

If you’re one of the many women who have a traditional IRA account, you may want to consider converting it to a Roth IRA. While it’s not the right choice for everyone, a Roth IRA is a much better solution for certain women who are trying to plan their finances for retirement.

In this guide, we’ll look at the main benefits of Roth conversions.

Roth IRAs vs. Traditional IRAs

Before moving your IRA to a Roth IRA, you need to understand what the differences between them are.

While there are many differences between traditional and Roth IRAs, the main thing to understand is that paying taxes on your contributions will differ. With a traditional IRA, you’ll pay taxes as income once you withdraw your contributions. However, with a Roth IRA, you’ll pay taxes when contributing.

If you’re older than 59½, you’ll be able to withdraw your contributions tax-free later on. However, remember that it will also need to have been more than 5 years since you contributed to your Roth IRA for the first time.

Another difference between Roth IRAs and traditional IRAs relates to required minimum distributions (RMDs). You’ll be required to start taking RMDs from a traditional IRA account once you reach the age of 72.

With Roth IRAs, however, you won’t be required to withdraw money at all. You can pass the account on to your heirs if you decide to do so.

Who Should Convert to a Roth IRA?

One of the main situations in which you might want to convert your IRA to a Roth IRA is if you expect to enter a higher tax bracket in retirement.

A Roth IRA is beneficial for someone who makes a low income now but will expect to make a higher income later. Converting to a Roth IRA can help you pay fewer taxes in the long run.

Another reason why you might want to convert to a Roth IRA is if you want to pass on money to your heirs. If you don’t expect that you’ll need to use the funds in your traditional IRA, then it might be worth converting it to a Roth IRA.

Since you won’t need to make RMDs with a Roth IRA, your savings can continue to grow and can be withdrawn tax-free by your heirs if certain conditions are met.

Benefits of Roth Conversions

So what are the main advantages of converting to a Roth IRA? Here are the main benefits of making the switch.

Withdraw Your Money Tax-Free

One of the key advantages of converting to a Roth IRA is that you can withdraw your money tax-free.

With a traditional IRA, you’ll have to pay taxes once you withdraw it and will need to consider it income. You’ll also need to pay taxes on the money you earn through your investments.

With a Roth IRA, you can end up saving a lot of money on taxes, particularly if you’ll be in a higher tax bracket in retirement. This makes opening a Roth IRA well worth it if you want to go ahead and take care of your taxes ahead of time.

Avoid RMD Penalties

If you have a traditional IRA, you’ll be required to take out RMDs starting at age 72. If you fail to do so, then you’ll have to pay tax penalties to the tune of 50% of the amount that you should have withdrawn.

With a Roth IRA, you won’t have to make withdrawals from your account if you don’t want to. This means you’ll avoid potential penalties for failing to withdraw your savings.

Grow Your Money Longer

Because Roth IRAs don’t require you to withdraw money, you can continue to grow your account for a longer period of time. You can keep your money in an account where it can continue to grow tax-free.

In addition, since you don’t have to withdraw the money at all, you can also leave your money to your heirs. They won’t need to pay federal income tax on the account if it’s been open for 5 years or more.

Get a Roth IRA With a High Income

One major reason why you may decide to convert your IRA is if you can’t get a Roth IRA otherwise.

Whereas a traditional IRA doesn’t have income limits, you’ll need to have less than a certain amount of income to open a Roth IRA. However, you can use a “backdoor” strategy to convert a traditional IRA to a Roth IRA, even if your income is too high for you to open a Roth IRA outright.

However, this strategy has some unintended consequences that could be problematic, so make sure that you understand it fully before doing it. Remember that you’ll have to wait five years to withdraw funds. You’ll also increase your taxable income since the pre-tax portion of your converted funds will become a part of your taxable income.

How to Initiate a Roth IRA Conversion

Going through with a Roth IRA conversion is fairly simple.

To get started, you’ll need to get in touch with the financial institution of your traditional IRA and request that they transfer your money and help with the conversion process. They can initiate a direct transfer to another financial institution or to the same institution, depending on where you’re opening a Roth IRA account.

An alternative to getting a direct transfer from your financial institution is to handle the Roth IRA conversion manually. To do this, you’ll withdraw money from your traditional IRA and then will deposit it into a Roth IRA account on your own.

Keep in mind that you’ll have 60 days to complete the transfer, or you might need to pay penalties. Also, remember that the money will become taxable as well.

Deciding Whether a Roth IRA Conversion Is Right for You

If you want to improve your retirement plan, consider the benefits of Roth conversions. Depending on your goals, a Roth IRA could be a much better choice for making sure you’re able to retire comfortably.