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July 20, 2016
Of all U.S. women, the vast majority — 83% — are not saving enough to meet their needs in retirement, the Aon research found.
Women will also need a projected 11.5 times their final pay to meet their retirement goals, as opposed to men who only need a projected 10.6 times their pay.
There are many reasons these findings may be true:
However, there are ways to take steps now to secure your or your loved one’s retirement even with these harsh findings.
Education about the market may be one component of why women are saving less than their male counterparts. “I make it a point to educate each of my clients, if they don’t already know, about what mutual funds, stocks and bonds are,” Burke says.
This uncertainty of what is going on in the market is something that Burke frequently sees in her clients. “A lot of times I see my female clients and they are really focused on investing in tangible assets, like real estate,” she says. “They would much rather have that than invest money in the market and essentially just gamble with it.”
And while women might feel less equipped to deal with personal finance, you might be surprised to learn that both men and women of all socio-economic levels are lacking in financial intelligence. Research has shown that personal finance is not an innate or widely learned skill.
Here are some ideas for retirement planning for women — or anyone — to use to learn more about personal finance:
Perhaps the easiest way to learn about personal finance is to take stock of your current finances — take a really good look at where you stand — and figure out where you need to be.
You also want to establish your goals — how much you need and what kind of contingency plans you might want in place for a secure retirement.
Doing this does not need to be difficult. You can use a detailed and reliable retirement calculator to assist you.
The NewRetirement retirement calculator is an easy to use tool that takes you step by step through the planning process. The system is designed to let you discover things about your own finances while giving you concrete answers about how much you need to save. This tool was recently named a best retirement calculator by the American Association of Individual Investors (AAII).
The calculator is designed to be equally effective whether you are single or married. It gives you independent inputs if you are married for each spouse and enables you to put different spending, saving and expense levels to give you a much more accurate estimates. It also helps estimate your longevity — calculating longer lives for women.
Using this kind of detailed retirement planning tool can really help you understand the levers you have over your finances. And, once you have a retirement savings goal, you may be more motivated to save.
While this piece of advice — save as much as possible — applies to both men and women, it may be more important for females since women need to fund longer life spans.
Tips for saving more:
Caring for your children or even for your aging parents can certainly be stressful, but many women find it to be one of the most rewarding experiences of their lives.
However, it is important to acknowledge the financial costs of care taking. There is the lack of income, but also the lack of saving for retirement during that time and also a potential reduction in Social Security income because you are not accumulating credits when you are not working.
Before you take on the care taking role, you should consider how you or you and your spouse can make up for financial losses.
In recent years, Burke has seen many married couples who don’t share everything. “Most often I see my clients and they have a separate bank account as well as a joint account with their spouse,” she says.
Of course keeping some things separate to protect yourself is important, but oftentimes both spouses don’t know exactly how much the other person is putting away for retirement and this can lead to problems once you are nearing retirement.
“I see a lot of times that a wife is saving less for retirement than her husband and that’s when I ask them the question why,” says Burke.
It is vital for the success of both you and your spouse to get on the same page and inform each other about how much you are each putting away, with the hope of not outliving your savings in retirement.
However, having a conversation with your spouse about retirement planning can be challenging. Many couples have had a lot of success by either:
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