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The first step is to decide what you realistically want to achieve financially. Financial goals might include early retirement, travel, a vacation home, securing your family's financial comfort on the death of a bread-winner, planning for the care of elderly relatives or building a family business.
Is there any validity to financial planning "rules of thumb" such as "saving 10 percent of your gross income?"
The following rules of thumb may work for some people, but they do not make financial sense for everyone. What is more important is to be able to know whether a particular rule of thumb suits your situation. Here are six of the more common rules along with some considerations that should not be overlooked.
1. Life insurance should equal five times your yearly salary
2. Save 10 percent of your salary per year
3. Contribute as much as you can to retirement plans
4. You need 80 percent of your pre-retirement income to retire comfortably
5. Subtract your age from 100 and invest that percentage in stocks
6. Maintain an emergency fund of six months' worth of expenses
With more women remaining single, nearly half of all marriages ending in divorce, and the odds of becoming a widow by the age of 55 hovering around 75 percent, nearly 9 out of 10 women will be solely responsible for their financial well-being at some point in their lives. But many are ill-prepared to do so.
Here are several areas where women fall behind when it comes to planning for their financial future:
What special problems do unmarried couples have to be concerned with in financial and estate planning?
In 2016, 18 million adults were cohabiting, according to a new Pew Research Center analysis of the Current Population Survey. This represents an increase of 29 percent since 2007. Because unmarried couples don't enjoy the same legal rights and protection as married couples do, financial planning considerations for issues such as retirement planning, estate planning, and taxes can be quite different. For example: