5 Secrets of Retirement Planning for Women (Wives, Moms, Daughters)


retirement planning for women Retirement planning for women — wives, daughters, mothersBoth women and men continue to save money for retirement in their 401(k)s at the same rate, but due to many factors, women — you, your wife, your daughter, your mother — are less financially prepared for retirement than men, according to recent research from Aon Hewitt.

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:

  • Women are living longer than men, explains Katie Burke, CFP and founder of Wealth by Empowerment. The longer life costs more.
  • “There is also the issue of the income gender gap,” Burke says. Women earn less than men and this can make saving more difficult.
  • Women often take time off from work to raise children or care for aging parents — leaving gaps in their saving histories.
  • Women are also often less involved with decision making for long term financial goals — like saving for retirement.

However, there are ways to take steps now to secure your or your loved one’s retirement even with these harsh findings.

1. Learn About Financial Markets and Investment Strategies

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:

  • Subscribe to a business magazine or a retirement newsletter to learn about retirement planning and investing options.
  • Familiarize yourself with one new personal finance term or concept every week.
  • Talk to friends or start a personal finance book club or an investment club.  Research has suggested that peers can help each other save more and improve their financial lives.
  • Get involved with managing your money.  If you are married, it is important that both spouses know how much the household will need for retirement.  If you are the wife, make sure you know about all of your accounts.  If you are the husband, make sure to show your wife your financial plan.

2. Assess Your Situation and Set Goals

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 Investor’s (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.

3. Save As Much As Possible

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:

  • To save more for retirement you should utilize your 401(k) to its fullest potential. This includes contributing and taking advantage of the full match percentage the employer is offering, Burke says.
  • “I always start my new clients out with putting at least 15% in retirement accounts and then slowly move up to 20-25% of their annual income,” she says. “Contributing to a Roth independent retirement account, if the woman is eligible, is another important strategy.”
  • If you can decide on an amount to be taken out of each paycheck, it is that much more simple, Burke points out. “The money is taken right off the top. They’ll never even see it and soon forget that it used to be there,” she says.

4. Consider the Costs of Care Taking

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.

  • If you are caring for an aging parent, can they compensate you financially?  Is there a better financial solution for their care?  Do they have a retirement financial plan? If they don’t have one, you might help them create one.
  • If you are married, can your spouse help you contribute to retirement savings during the gaps?

5. Get on the Same Page As Your Spouse

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:

  • Going through a retirement calculator and inputting the information together.  It can be a great learning experience and an excellent way to start a meaningful conversation about retirement and finances.
  • Meeting together with a financial planner to go over retirement planning.

Find out much you should save for retirement



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