In this day and age where women are advancing in careers and business ownership, and experiencing success their predecessors only dreamed of, they still lag behind men in one key area: saving and planning for a financially secure retirement.
Women are at risk of experiencing a financial shortfall in retirement. In other words, they risk outliving their money.
The five primary economic and social factors that threaten the financial security of women in retirement are:
Women’s lifetime income is less than men’s due to the fact that they take time out of the workforce to care for loved ones. Which means they don’t get to enjoy the financial increases over the life of their careers that men do. Women tend to work part time – or not at all – in order to stay home with the kids. Therefore they contribute less to retirement savings and earn less Social Security benefits, which translates into lower retirement income. Statistically, women outlive men, which means they need more money to live. Because women live longer, their cost for healthcare (i.e. long term care) is more than men’s. As pervading as these factors are to women’s financial security, there are ways to mitigate them.
Here are four ways women can improve their financial security for retirement.
Start saving as much as you can for retirement. Take advantage of workplace retirement plans. Visit your HR department and arrange to begin payroll deductions. If you already contribute, increase the amount. Start saving after tax dollars as well. This way you can create tax-diversity in your retirement income. The last thing you want is to have all of your income be at the mercy of future tax rates. Take a look at your monthly expenditures to determine where you can find more money to save. Make a decision to cut way down on expenses today in order to save more for your future. Your future self will thank you profusely. Get educated about retirement planning for women. Learn about all the various ways you can save for retirement and make your retirement savings last longer. Even if your husband “handles all the finances.” Like anything else, two heads are better than one. If you’re a single gal, find a financial professional you feel comfortable with and let them help you create a plan.