Women are taking a more active role in planning their finances, and the women who come to you for help with planning for retirement are no exception.

Women are more investment savvy than ever, with a growing number becoming entrepreneurs and entering higher income earning brackets, and a larger percentage remaining single longer.

Experienced financial services representatives know that retirement planning is especially challenging for women.

According to the U.S. Department of Labor, women are twice as likely as men to live below the poverty line during their retirement years. One contributing factor is the difference in wages between men and women. For example, on average, women earn 76 cents for every $1 that men earn. Women also tend to change jobs more frequently and work part time more often, which means a woman may only receive half the company-sponsored pension benefits a comparable man might receive, if she gets any pension benefits at all.

Meanwhile, advances in medical care and technology have helped increase women’s life expectancies. According to the Labor Department, women who retire at age 55 can expect to live another 27 years–almost four years longer than men retiring at the same age. Studies estimate that a retiree needs about 70% to 80% of her pre-retirement income each year to live comfortably. A financial services representative may have to help a typical female client use her own personal savings and investments to generate a substantial portion of her income for 20 or 30 years.

In addition to longevity risk, inflation plays a very significant role in determining how much a woman will need for retirement. Because the cost of goods and services will “inflate” over time while buying power will decrease, women also must factor in inflation rates when designing their retirement savings strategies, as inflation will affect how long their retirement savings will last. Additionally, from my own personal experience, women tend to invest more conservatively than men, which greatly lowers the average rates of return on their investments and, in the end, their retirement savings. In order to grow a portfolio and stay ahead of inflation, a woman must be willing to take on a small amount of risk while building her nest egg.

One possible way for a woman to stay ahead of inflation while managing risk is through the use of an income annuity which, when annuitized, provides a guaranteed income for life by the issuing insurance company. The insurer that issues the income annuity can provide a guaranteed income for life, but financial services representatives must remind clients that investing in such products does involve market risk.

Financial services reps also must inform clients that annuities are subject to ordinary income taxes and that withdrawals before age 59 1/2 are generally subject to a 10% tax penalty. Because IRAs and other qualified programs provide tax deferral, clients should have reasons other than tax deferral to buy an annuity.

Other tools women may be able to use to prepare for retirement include 401(k) plans, individual retirement accounts, individual retirement annuities, nonqualified annuities, and individual securities and mutual funds held outside tax-qualified retirement accounts.

Here are some other points to keep in mind when you are working with women who are planning for retirement:

o Illustrate the importance of saving as early as possible. Generally, the longer one waits to save for retirement, the greater the monthly contributions will have to be to secure that retirement income adequately.

o Review all of a client’s individual and employer-sponsored retirement savings options.

o Diversify assets to guard against market volatility and inflation. Although diversification does not eliminate risk entirely, it acts as a cushion.

o Maximize retirement and investment strategies by prioritizing the needs and interests of the client periodically at each life stage. You will need to take the pulse of your client’s retirement plan if and when she gets married, buys a home, has children, starts taking care of elderly parents and experiences other major life events.