Overcome Anti-Woman Retirement Obstacles to Fully Fund Your Future
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It’s harder for women to save money for retirement – that’s just a fact.
And that can leave many of us in a dicey situation when we’re ready to stop working, or can’t work anymore.
The world throws a bunch of obstacles at us that can get in the way of building secure retirement nest eggs:
- We earn less than men, and that affects our entire lifetime earnings – when you start out earning less, raises and bonuses (based on percentage of salary) end up smaller.
- Lower earnings make it harder to save – a higher percentage of every paycheck goes toward expenses and debt payments, leaving less money to go into savings.
- Lower earnings translate into smaller Social Security retirement benefits – Social Security payments are based on lifetime earnings, and lower earnings means smaller Social Security benefits.
- We’re more likely to pause our careers to care for children and other family members – and stepping out of the work force for any amount of time (even just a few months) interrupts retirement savings opportunities.
- We live longer than men, so we need more money overall.
So, yes, we face an uphill battle trying to save for retirement. But that doesn’t mean we can’t or won’t get it done. We can level that playing field, and save enough to retire comfortably… we just have to take the right steps as soon as possible to make that happen.
How Far Behind Are We?
Overall, women are facing some pretty big savings shortfalls. And that makes a lot of us just turn off – the whole thing feels so overwhelming that it’s just easier to ignore it now and worry about it later.
That’s why the numbers look so startling…
According to the 18th Annual Transamerica Retirement Survey:
- 88% of women are not “very confident” that they’ll be able to retire fully and live comfortably
- 54% expect to keep working after they retire
- 64% of us have no backup plan in case we’re forced to retire earlier than we want to
- 30% of women are counting on Social Security to be their main source of income in retirement
- 55% of women guessed how much money they’ll need to save for retirement, and most expect to need about $500,000
- Our median total household retirement savings is only about $42,000
Those numbers seem pretty depressing, and the outlook seems pretty bleak.
But we can turn this around. We can build enough retirement savings for a financially secure future, but we have to start taking charge of this right now.
Start Right Now
The most important thing you can do issomething… anything at all… to jumpstart your retirement savings today. Every single dollar you save today will help build up the nest egg that will fund your future.
And you’ll never have more time on your side than you do right now.
That’s why it’s crucial to prioritize retirement savings.
You face an overload of current financial demands every day. That makes it more appealing to stick “retirement” savings at the bottom of the list… if it even makes the list at all. Most of us – especially single moms – prioritize spending and saving for things that affect our kids over our own futures.
But if you don’t start putting something away for retirement now, you won’t have a financial safety net in the future. Here’s why NOW is critical: Time is the most important factor in retirement savings. That’s because of compounding – the “magic” power that lets your money grow over time.
And that’s especially true if you have a retirement plan through your job where your employer offers matching contributions – that is literally free money. So if you don’t contribute to your employer retirement plan, you’re not only missing out on time and savings, you’re also walking away from free money.
Looking for a clear step-by-step guide to help you figure out your retirement plan? You’ll find all the answers you’re looking for – and more – in my new book, Retirement 101.
Life Piles on Obstacles
When it comes to saving money – especially retirement savings – women just face more obstacles than men. On top of the gender pay gap that follows us for our whole careers, our temporary time-outs to take care of family, and our longer lives, the world throws extra complications at us.
The two biggest: student loan debt and single-mom households.
Women bear about two-thirds of the total outstanding student loan debt… about $929 billion. The American Association of University Women put out a report that revealed some shocking information:
- Overall, we take out bigger loans than men, borrowing about 14% more on average.
- We earn less than men (as a group), so it’s harder and it takes longer to pay down student loan debt.
- We pay more interest over time because our loans are bigger and it us takes longer to pay them off.
Then, there are the extra hurdles single moms face. And let’s face it – there are a lot of them. We have too many demands on our money:
- Everyday living expenses
- Supporting our kids’ many activities and interests
- Saving for our kids’ college
- Paying down debt
There’s really no room for retirement savings on the list… but you need to stick right up on the top. Yes, our kids are the priority, but that doesn’t mean we have to ignore our own financial futures.
Overcome Those Obstacles and Prioritize Retirement
These situations (especially if they’re combined) can make it much harder to build a substantial retirement nest egg… but not impossible if you use smart financial strategies.
On the student debt front: Prioritize putting money into retirement savings as soon as you start earning money rather than making extra payments on your loans (but make all of the scheduled payments). That will help you build up your nest egg because your money will have more time to grow. After doing that for five or ten years, switch gears toward aggressive debt paydown, and put at least something into your retirement account – especially if you get an employer match.
On the single mom front: Take your retirement savings right off the top of the monthly money pile, rather than trying to scrounge up “extra” money you can use for that (it’ll never happen). If money is tight, start with a small amount, even just $10 from every paycheck. That will get your retirement savings habit started, and soon you won’t even notice that money is gone. Increase your contribution by 1% or 2% at least once a year (more often is better). The sooner you start, the bigger your nest egg will end up, so any amount you put away now is worthwhile – again, especially if you get an employer match
We have to ease the path for our future selves by prioritizing retirement savings. After all, if we don’t start taking care of our futures right now, we’ll end up old and poor – suffering from great financial stress when we should be relaxing on a beach somewhere. Your future self is counting on you, so putting your retirement savings first and redirecting more money toward your nest egg is the right choice (even if it doesn’t feel that way!)
Invest for the Long Haul… and Outside of Your Comfort Zone
Our last hurdle: Women tend to be much more conservative with money than men, choosing safety over growth.
That sounds safer, but you can end up losing purchasing power with this strategy: Your earnings won’t keep up with inflation, so you’ll effectively lose money (even if you don’t actually lose money).
Safer investments mean lower returns, so your money won’t grow nearly as quickly. That can have an enormous effect over time, and may even put your financial future at risk. While you still have plenty of time before retirement, you need to take some smart investment risks to allow your money its best chance to grow.
If you’re not sure where to invest, you can either start with a beginner portfolio of funds or talk with a financial advisor. If you go the advisor route, make sure that you:
- Find a fiduciary, fee-only advisor: a professional who is ethically and legally bound to put your interests first and won’t steer you toward investments to enrich themselves
- Check out their qualifications: make sure they’re licensed in your state, and their license is in good standing (check with a state board for that)
- Know what kind of services you’re looking for: before you talk to anyone, figure out what you want them to do for you (manage your money for you or suggest investments, for example)
- Feel comfortable and listened to: if the advisor talks over you, doesn’t answer questions clearly, doesn’t ask you questions, or just plain makes you uncomfortable, find someone else.
No matter how much you can put away, and no matter how you choose your investments, the most important thing to do is start right now. Your future self will be so glad you did.
Need help getting started? Contact me and together we’ll make a plan.