At CKS Summit Group, we know that preparedness is the key to a secure financial future. Here’s why women can no longer pass the buck when it comes to their retirement plans, since they earn less, save less and live longer.
Despite the current trend toward erasing differences between genders, unfortunately the fact remains that women and men are not equal in all things. The steps you take today will shape your life when you’re no longer working.
Women face unique challenges when saving for retirement. For one, they live longer than men — on average by six to eight years, according to the World Health Organization.
They’re also subject to higher health-care costs… A woman retiring at age 65 in 2019 is likely to pay around $150,000 in health-care costs throughout retirement, while the number drops to $135,000 for men, according to an annual analysis by Fidelity Investments.
Then there is having children. Once women return to the workforce, they can fall behind in rank and miss out on opportunities for promotion. Also known as the “Motherhood Penalty”, women face losing $16,000 a year in lost wages, according to an analysis of Census data by the nonprofit advocacy organization National Women’s Law Center in 2018.
Get Head of the Game
It’s harder than ever playing catch up. Women need to build a strong retirement plan to counteract these gender inequalities and combat the uphill struggle they’re currently facing in retirement. And they should start while in the workforce by asking for more money. Women earn $25 an hour on average, only 79% of the $32 an hour their male counterparts make, according to a study from the ADP Research Institute.
Pro Tip: When negotiating a higher salary, base that number on your needs, including your lifestyle, savings plan and emergency fund. If you don’t ask, you don’t get.
Save, Save, Save
Ideally, every person, and women in particular, need to have a fallback fund. Putting money aside in order to have a cushion that they’re not living paycheck to paycheck is the best way to reach retirement goals.
However, if working in a low-income job or are close to retirement age, saving enough might not be possible. Instead, it’s worth considering whether they can do the following to stretch their retirement dollars further. Questions to ask, include:
- Can you work longer to save more?
- Can you delay the start of Social Security benefits? You get an 8% boost in your monthly benefit amount for every year you delay from your full retirement age until age 70.
- Can you limit your retirement travel?
- Are there less expensive living options available?
Pro tip: If means are limited, you may have to adjust your lifestyle in retirement right from the start. That can be disappointing, but it’s less disappointing than realizing you’ve run out of cash at age 75.
Find a Financial Advisor
Working with a professional they can trust (and who has an understanding of their needs) is a great first step in setting up a solid retirement plan. Asking their chosen advisor what percentage of their client base are women, and if they have experience in assisting women in particular with retirement planning is a great starting point.
Pro Tip: It’s simply not worth waiting until it’s too late – it’s time to get started today in creating a custom retirement portfolio around the things that make you happy. And when it’s complete, you’ll be able to approach retirement confidently and with peace of mind.