Essential Financials For Women: Just Know What You Need To Know…You Know?

Women are worried— about their kids, their parents’ health, the virus and Yes, their retirement security. So, you’d think that— given how quickly women take pragmatic steps to protect their kids, and their parents —headlines confirming worries about retirement would result in a financial strategy for their old age. But, it’s complicated, right? It is, but honestly that shouldn’t prevent your stepping into retirement-planning mode. You don’t have to become an expert on retirement matters—you don’t have to lead the retirement workshop. You just need to take charge of your own life.  

That’s one of the clear takeaways from a recent government report in which 14 focus groups of women, mostly age 70 and older—urban and rural—shared their struggles in retirement. Overwhelmingly, these women expressed regret at not knowing how to take care of themselves financially. Their definition of well-being included:  the ability to afford things beyond the essentials, not having to worry about the future, and not relying on others supporting them financially. Consider taking their ‘not knowing’ regrets as a motivator to jumpstart your learning the retirement basics that all women should know.

Your life will likely require a careful financial plan –different than a man’s. Simply put, women need more income for retirement than men. For starters, women have a good chance of living a longer life, and are more likely to be living alone in later years. If you are in your mid-50s now, you have an even chance of living to age 90. And about 67% of women over age 85 live alone — another risk factor for eventual poverty in old age. If you are part of a couple you need to plan together and separately for what happens when one of you ends up alone.

Women’s earnings and work life result in less money in savings and retirement benefits.   Unfortunately, women earn less on average over their work lives than men do – think teachers, nurses, childcare workers. And due to the long-term effect of the gender pay gap, women working full-time take home only 82% of what men do. While the gap may be shrinking—for women age 20-24, it is 10%—it often reappears after women get married and have children into their 30’s.

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There’s also the undeniable fact that women are more likely to take time out of the workforce to care for kids, parents or a spouse – nine years, according to the Pew Research Center. And there are caregiver costs beyond the obvious time-out loss of pay, fewer benefits and matching contributions. These include: missed promotions, cancelled trainings requiring travel, postponed home improvements, and probably earning less when you do go back to work, either part- or full-time. You almost certainly won’t have saved as much in company retirement savings plans as your male counterpart. (There is, however, some 401(k) research showing that some high-earning women are actually saving more than the men.)

Promote yourself from just “paying the bills.” Taking part in your basic financial care is a three-part process: there’s paying the bills, saving for emergencies and saving for retirement. Paying the bills is no small task. But you also need to train your brain to think about the future. Do you have an account set up to cover emergencies? Another for retirement? Did you have a 401(k) plan with a previous employer that you may have rolled over into an IRA? Or is it still with that last employer? If so, don’t lose track of where your retirement accounts are located and keep your address up to date with the plan administrator.

If you are married and leave your spouse in charge of overseeing the investments, Get Involved. Ask for and read statements for all personal investment accounts, company retirement-savings plans and insurance policies, and check that you’re listed on the accounts and/or as a beneficiary.

Don’t wait to learn about your Social Security benefits. Register for your Social Security account right after you finish reading this to see your estimated benefits—and then consider using a retirement calculator to find out how much you might need to be saving to add to those benefits. As the information page for Social Security states, these benefits are meant to provide a foundation for your retirement income—not completely fund it—so personal savings (including hopefully a retirement-savings account) are also important to replace income from your paycheck.

While you’re at the site, experiment with the Social Security calculator to discover how timing when you choose to take your benefits can significantly affect how much they will be. By waiting to begin collecting benefits at age 70, for instance, you will receive substantially more each month than if you take them at full retirement age 66 now(8% more per year, if you were born between 1943 and 1954). Also, as you get closer to retirement, depending on your circumstances, you may be entitled to surviving spouse (widow’s ) benefits or, if you were married at least 10 years, a divorced spouse’s benefits.  

Make this the year you learn ways to fund your retirement.

If you contribute to a retirement savings plan at work, great. Next, find out if you’re invested in funds that make sense for you, given your age. In the future, if you work part-time you might be able to start saving in the company’s retirement plan, thanks to the new federal SECURE Act. And if you’re self-employed, consider opening a no-fee individual retirement account (IRA), with a modest amount to start. And, find out if you’re eligible for the saver’s tax credit -it’s an incentive to help offset the cost of saving for retirement.

Always remember, every bit you save makes a difference. Those women surveyed in the government report honed in most frequently on how important it is to save. And yet the Aegon Global annual survey found that only half of the women reported being habitual savers.

Believe that you can better your finances—even given the world we are living in. After I lost everything in a house fire, I realized that there is no perfect blue-sky time in life when all the planets are aligned, and so I got serious about saving. Women ask, how much will I need to save – one very general rule is to build up to saving 15 percent of salary. But really just start – do whatever you can. It will add up. 

One last direction: let other women’s experiences help you see what you can do to help yourself financially. Ask your single aunt who has enough saved to take a trip every year and afford the vet bills—how does she do it? The friend who got into finance, but still seems down to earth, what can she share with you? (Maybe the name of an advisor to interview.) Ask around, learn. And maybe one day you’ll be the one passing along the interesting money story.

IrsRetirement Savings Contributions Savers Credit | Internal Revenue Service GaoRetirement Security: Older Women Report Facing a Financially Uncertain Future

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