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Common Financial Mistakes
Special Advice for Women

In my book Making the Golden Years Golden, I help the reader develop plans for their future retirement. Women tend to be less prepared then men. In this article, I address the women that are more likely to be less financially savvy, and thus make costly mistakes.

Statistics show that women live 8-10 years longer than men. Fifty percent of marriages end in divorce, so you must be prepared to manage your finances wisely if you should be one of the women that are living on your own. The following are ten mistakes that are most commonly made as well as suggestions of how to avoid them or correct them:

1. Being unfamiliar with finances.

Women tend to let their spouses handle family finances and all related decisions.
Protect yourself by making sure you know of all investments, all accounts, and ensure your name appears on all of them. Joint ownership establishes your legal right to all assets in the event of your spouse becoming ill or the unfortunate event of the marriage ending.

2. Not saving early enoughfor retirement.

It is never to late start today. Resist unnecessary spending. However small the steps, start as soon as possible.

3. Investing in one basket.

Diversify your investment to reduce risk. When investing for retirement, go with lower levels of risk, and put money into accounts that will give you a tax break, such as 401K or an Individual Retirement Account (IRA). The longer you build up your retirement assets with tax differed accounts, the better of a retirement you will have.

4. Tapping into your retirement account too soon.

No matter what is the reason, do not use your retirement money. It is difficult to replenish it.

5. Starting to collect Social Security too early.

Many retiring Americans begin to collect early at a reduced rate. If you wait until you are 65 years old to collect your Social Security benefits, your monthly check will be 20 percent higher than if you start at 62 years.

6. Not purchasing Long Term Care Insurance.

Women are more likely not to have Long Term Care Insurance, assuming that Medicare will cover home care or nursing home stay. Medicare will only cover 100 days of rehabilitation and only if you will recover from the condition you are being rehabilitated from. If you purchase LTI early, in your fifties, it will be much lower than if the same policy is purchased in your sixties.

7. Carrying Debt.

Decrease debt that so easily piles up on credit cards. Avoid needing to pay interest on credit card balances. Try to enter your retirement years debt free.

8. Not having a Will or Health Proxy.

Eight out of ten women do not have Wills or Health Proxy. The first instructs what should be done with your assets.The second empowers someone you trust to speak for you when you are unable to do so regarding medical care.

If you do not have a Health Proxy, doctors that may not know you will decide regarding your care.

9. Not Planning for Residential Options in the Future.

Plan your life after you retire. You will need about 80 percent of your current income to live comfortably. You should preplan your residential situation. Consider scaling down housing expenses. Most of us do not need the large houses we lived in with our children. Research ahead of time the options and the cost for them (e.g., retirement communities, residential facilities, senior housing, etc.).

10. Women are less likely to start second careers.

If you need to supplement your income, there are many opportunities that can be suitable for you. Check out local schools, hospitals, nursing homes, and libraries; they all need part-time workers.

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Boomers Resource Guide is a special supplement to the Senior Citizen's Guide