Most women confess they don’t have enough savings in their retirement fund. According to a survey, only 12 percent of female workers are confident about retiring comfortably and almost half of the women are not confident about their retirement plans.
The Wage Gap
Most women find it hard to save up for life after their professional careers. Some experts point to the gender wage gap as one of the reasons for this. On an average, women earn 84 cents to every dollar that their male counterparts make. Lower income means less opportunities to save for the future.
Time Off Work
Women also take a lot of time out from work to either care for their aging parents or their children. As a result, they make less money, which reduces their total earnings and benefits from Social Security.
Not Risk-Takers
Women generally don’t want to take risks when it comes to their finances. They tend to keep their cash in savings accounts, instead of investing in stocks and other higher-yielding assets. When the market is good, men tend to reap most of its benefits.
Women Spend More Money During Retirement
Aside from not having enough savings for retirement, women tend to spend more money than men when they retire. They don’t spend it buying material things or going on cruises. Instead, they place more money in healthcare. Women have a higher risk of suffering from chronic illnesses, resulting in expensive medical bills.
How Women Can Improve Retirement Savings
The good news is that women can improve their finances to give themselves the opportunity to live a comfortable life during retirement. As a woman, here are some ways to maximize your retirement funds.
1. Determine Net Worth
Women can sometimes feel overwhelmed when they calculate their net worth and many fear knowing the total amount of their debts. The truth is, knowing your net worth is the best way to gain financial sustainability in the future. You’ll never know the state of your finances unless you find out your net worth and this information can be very helpful in developing plans for retirement for women who have less savings and net worth.
To start, all you need to do to is get the total of your assets and deduct the total amount of liabilities from it. The result is your net worth. Do not focus on the number, but instead, use it as the starting point in planning your financial future. Now that you have a base, it will be much easier to build on it and increase that number before retiring.
2. Learn About Social Security Benefits
Some retirees rely on Social Security for their income. Focusing on Social Security benefits alone can become a huge problem because they will not cover all your overhead expenses during retirement.
Another problem women face is that many collect their benefits early. As a result, their lifetime income decreases. It is important for women to become more realistic about the money they get from Social Security and to maximize those funds.
An accountant can provide advice when it comes to Social Security benefits. The correct action to take may vary based on your situation—whether you are single, widowed, divorced or married. It can be complicated and ask a professional for assistance.
3. Contribute to a Retirement Plan
If the employer provides a retirement plan, maximize your contributions, especially if the company matches them. Consider this to be free money that can help to make your retirement more comfortable. When contributing to a retirement fund, automatically deduct the amount from your paycheck each month. That way, you will not forget about making contributions monthly.
4. Check Your Credit Score
It is important to check your credit rating even if you are not applying for just right loans. Knowing your score provides you with a clear picture of how you are managing your finances. Checking it annually will indicate whether you are doing a good job or damaging your credit.
Knowing your credit rating can also lead to better financial habits, such as paying bills on time. It can help develop your confidence as you observe your score improving year after year. The good news is that you don’t need to pay for a credit score request. Get one from your lender or bank, or from various websites.
5. Have a Realistic Retirement Budget
Make sure that your retirement fund is enough to sustain your lifestyle. In most cases, women fail to consider their health after retiring and do not include health care expenses in their budget.
To enjoy a certain lifestyle later in life, take some time to calculate how much you really need to save. Come up with a realistic budget so that you can plan accordingly. Having a small retirement fund can make your life miserable in the future. Use an online calculator to come up with a retirement savings goal.
6. Research Retirement Investing
Many women don’t know about retirement investing. Some employers provide workshops on this topic to help their workers save up for their lives as retirees. Aside from the standard 401(k) plan, you can also put money in an IRA or try opening a regular investment account. Each option has its pros and cons and you need to learn which choice best suits your situation.
7. Think Outside of the Box
If you have done everything you can, but still don’t have enough in your retirement fund, then look for other ways to supplement your income. For most women, taking on another job is not an option, especially if they are also taking care of their children.
One way to earn more is by looking at your hobbies, passions, and skills, and find ways to make money on the side by starting your own business. Use your downtime to find ways to earn more money for your retirement fund.
These are just some ways women can save enough for their retirement. While women cannot control some factors that contribute to this problem, there are things they can do to ensure they have adequate money to sustain their lives as retirees.
