It is a common belief that saving for retirement is harder for women, and a recent Transamerica Center study showing that 85% of women aren’t saving enough supports that idea. Additionally, the Department of Labor has found that only 44% of salaried women in the United States are participating in a retirement plan.
So why can’t women seem to put away as much as men when they are generally expected to live longer than a man of the same age? One contributing factor to this issue is that women are more likely to work part-time positions. Another aspect that plays into the savings struggle is women generally invest much more conservatively than men choose to do.
We’d like to share a few ideas as to how women can start putting away more for retirement today and hopefully make the idea of retirement a little less daunting.
1. Educate Yourself About Investing
The best way to gain confidence on any subject, not just retirement planning, is to become more familiar with the subject. A 2014 TIAA-CREF survey found that 63% of women who received financial advice felt confident about their retirement savings progress. Becoming financially literate is the first step to making your retirement savings effort successful.
2. Estimate High When it Comes to Your Needs
One thing you will never hear a financial professional say is you’re saving too much for retirement. Most people save too little and come up short when it matters the most. There are many different ways you can save for retirement—an IRA, a retirement plan through your employer and a savings account are just a few examples.
3. Follow the 10% Rule
A commonly followed rule that is highly recommended by many is to save 10% of your income as soon as you can. Starting early allows you to take advantage of the power of compounding that will happen over the years. Saving early sets you up for success down the road.
4. Increase Your Income
What seems worse to you, asking for a raise or falling short of your retirement goals down the road? Asking for a raise may seem scary but not being able to retire comfortably down the road is a lot more frightening to most. In addition to a raise, it is always possible to create an additional income stream through a side job.
5. Reduce Debt to Help Save More
The more debt you have to pay off the less money you have going into your retirement savings. It has been found that women typically accumulate less debt than men and are less likely to default on payments. Reducing debt as quickly as possible increases the amount you could be saving for retirement. Not sure how to reduce debt? We have some ideas for you here.
What Are You Waiting For?
The sooner you get started, the better off you will be. Even putting away small sums has the ability to gain interest over time. If you haven’t already, look into the retirement plan offered by your employer. If you don’t qualify for your employer’s retirement plan, you’re not out of luck, you can still save for retirement on your own. (For related reading, see: Why Save for Retirement in Your 20s?)
These are your finances. The sooner you take control of them, the better off you will be not only right now, but during your retirement years as well. Playing an active role in your finances means you will have a good handle to address problems such as spending issues, paying off and avoiding debt, and the numerous other financial dilemmas life tends to hand out.
More than anything, it is important to have a plan. A plan is a key component of tackling something like retirement. Reach out to a financial advisor today to get started with your comprehensive retirement plan. (For more from this author, see: The Benefits of Comprehensive Financial Planning.)