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Women: Are you setting aside enough?

Women: Are you setting aside enough?

March 24, 2021
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I've rarely met a woman who hasn't worried that her money will run out in retirement. It's a valid concern and one, as a financial advisor, that I help my clients address. Women have an even greater need than men to begin saving as much as they can early in their careers, since they have a longer lifespan than men1 and typically earn less over their lifetimes2. The Women’s Institute for a Secure Retirement recommends developing three sources for retirement income: individual savings, Social Security, and a pension or retirement plan such as a 401(k) and/or IRA. 

What are simple things you can do now to start stashing away more funds for the future?

  • Budget the amount spent on common splurges such as daily lattes or dining out. You work hard and deserve nice things, but staying within a budget helps ensure that the treats don't eat into your long-term dreams. 
  • Get rid of services you pay for on autopilot that you don’t actually use. Check your credit card and bank statements each month to find those charges you may have forgotten are recurring. 
  • Decide how much you'd like to contribute to your savings and investment accounts each month and automate it so that you pay yourself first. We get used to living according to our means. If you stash it before you get used to spending it, you won't even notice it's gone. 
  • If you've maximized your retirement savings, start a taxable investment account. Put all of your money to work for you. 

Investing can help you reach your retirement goals and may even offer a tax benefit. Depending on your age and what you have saved, setting aside between 10 to 25% of your income can build the nest egg you'll need for retirement. If you have access to a retirement plan through your employer, a simple strategy for increasing the amount you save is to increase your contribution each year by the amount of your annual raise. If your employer matches your contributions, be sure you are contributing at least the full match amount. Ideally you want to have ten times your final salary set aside for retirement. For example, if your final salary is $80,000, you'll need 10 x $80,000 = $800,000. You get the picture. Considering many people live 20-30 years in retirement, it makes sense that you need a sizable base. 

Finally, don't forget about your emergency fund. Saving for retirement can get derailed if you don’t plan for unexpected expenses or loss of income. Strive to keep three to six months of expenses in an emergency savings account to cover the unplanned costs so that you don't have to tap into your retirement or investment accounts.

If you have any questions about how much you'll need to retire comfortably - or aren't sure what to fund first - don't hesitate to reach out. I love to strategize and help folks optimize their financial lives. 

https://www.who.int/gho/women_and_health/mortality/situation_trends_life_expectancy/

https://iwpr.org/issue/employment-education-economic-change/pay-equity-discrimination/