Even though the country is moving toward erasing the gender boundaries, there are some things where women and men have to acknowledge they are different. Retirement planning is one of them.
Research has shown that women in general are better investors. Data going back years show that their aversion to risk usually leads to better long-term outcomes.
That doesn’t mean being female means you retire better. In fact, there are factors stacked against women from the start. If you are a woman planning for her golden years, keep the five following factors in mind.
Women need to start sooner
Several studies have shown that women live longer than men, which may seem like a good thing but it can also be expensive! According to the Social Security Administration, a woman who is 65 years old today can expect to live until she is 86.5. A 65 year old man can expect to make it to age 84.
This roughly three years of difference might not sound like a lot but it is, especially when it comes saving for the retirement. So it is best to start planning your retirement as soon as you can.
Take full advantage of your 401(k)
If your personal savings are not up to the mark, don’t be discouraged! Assuming you are still working, you can start doubling up on your savings efforts and this includes taking advantage of your company’s 401(k) plan.
The majority of employers will match contributions which means you might be able to immediately double your retirement fund deposits, up to a certain point.
If your employer doesn’t have a 401(k) plan you can open an IRA account and claim tax benefits that way.
Take advantage of savings catch-ups
Women are more likely to take time off from the workforce to raise children, so they often have less in totals savings compared to men. If you don’t have enough savings at this point in your life, it’s time to become more focused in your retirement planning efforts.
First figure out how much retirement is likely to cost you. You can do this with the help of a financial planner or, if you can’t afford one, a free retirement calculator online.
If you are 50 or older you are allowed to make extra contributions to 401(k), 403(b) and IRA plans. Women are especially encourage to take full advantage of these added tax-advantaged savings limits.
Make it a priority
A Transamerica survey found that, compared with 62% of working men only 51% of working women prioritize retirement planning. Nearly 41% of women said that their biggest financial priority was covering daily expenses.
That could be a reflection of lower pay, which is a shame, but that doesn’t mean your retirement plan doesn’t matter. It does.
Take a good look at your present income and savings and then ask yourself: “Am I on the right track to save enough to reach the goal of retirement plan?” Consider how you can increase your saving and still have a full life.
Manage your expectations
If you know you are falling short you can still make it by ramping up your savings and adjusting your current lifestyle. If you work in a job that doesn’t pay well or you are close to the retirement age, you may need to get creative.
For instance, anyone can delay the start of Social Security benefits and get an 8% increase in your monthly benefit amount for every year you delay, from your full retirement age, usually around 65 or so, until you are 70. You can also work longer to save more or move to a less expensive part of the country.
