It’s a well-documented fact: women are far less financially prepared for retirement than men. They live longer, earn less, and tend to focus on their families’ needs before their own.
Taking time off work to care for children or aging parents, women have fewer working years to earn money. They also make less overall with those gaps in earning years associated with fewer promotions and raises. These factors also contribute to fewer opportunities to participate in employer-sponsored pension plans.
Thus begs the question: what can women do to secure more financially stable retirements for their golden years?
For starters, they should begin saving immediately. Women should open an IRA as soon as possible, and start contributing regularly to any retirement plan available through their employer. Monthly contributions should be automated, making sure that the amount is sufficient to trigger any employer match. For traditional IRAs, women over 50 can take advantage of a catch-up provision that allows them to contribute an extra $1,000 each year above the $5,500 contribution limit. Saving now without further delays sets women on the right path and mindset towards serious saving.
Women also need to increase their financial literacy and change their attitudes towards the stock market. Research repeatedly shows that men are more willing to take investment risks than women. Meeting with a trusted financial advisor to assess personal risk tolerance and create a diversified financial plan can help women invest in a mix of moderately risky-stocks with more confidence and knowledge.
Annual reviews provide opportunity to make investment adjustments based on yearly market changes; such a commitment also provides reassurance as a portfolio that is regularly managed and reviewed maximizes growth while mitigating loss. Women should also take steps to become more financially savvy via financial education courses and similar programs. By taking charge of their financial health, women can create portfolios that address their unique goals and needs for the long-term.
A commitment to saving and preparing for retirement is vital. As caregivers, women frequently prioritize their loved ones’ needs, pushing aside their own needs. Ironically, by addressing their own financial health now, they will be decreasing the likelihood of becoming a financial burden on others in their later years. For some women, that might mean working a few years longer to increase savings and retirement investment opportunities. Delaying social security checks is also vital; the government rewards those who do so with bigger lifetime checks.
Even though many seniors report that their greatest fear is running out of money prematurely, women often underestimate how long they will live. They are often alone in their final years and unprepared financially for the cost of health care and support services. It is vital that they set financial goals that realize their true lifetime needs and take steps to ensure that there plans will cover them throughout their senior years.
At Silverman Financial, we provide financial planning services to help women prepare for stable futures. Through personalized meetings and annual reviews, we establish flexible investment plans that provide lasting security.