When it comes to retirement planning, women have some unique considerations. Studies show that, on average, women make less than men over their lifetimes and take more time away from the workforce as caregivers. This means they have fewer opportunities to save for retirement. Even when they put money away, they are likely to accumulate fewer savings than their male counterparts.
Important Retirement Challenges For Women
Not only do women usually outlive their male counterparts, but they also tend to save less for their retirement. A primary contributor to this deficit is the gender pay gap--women earn 82 cents for every dollar made by a man and are more likely to take up part-time jobs without access to workplace savings plans (US Census). In addition, women frequently find themselves having to choose between job commitments and family obligations because many of them are primary caretakers. As a result, they may have no other choice but to take a leave from their jobs to tend to loved ones. Due to a lack of resources, many older women are now dependent on Social Security as their only source of income. This renders them even more financially burdened during these later years in life.
Why retirement is different for a woman
Females, on average, live longer than males, consequently requiring their nest egg to stretch even further in retirement. This is one of the numerous considerations women must bear in mind when preparing for life after work.
Oftentimes, women allocate their finances towards daily expenses and family commitments, debt payments, or real estate investments before attending to retirement savings.
Additionally, women in the workplace face a unique set of challenges that men do not. This imbalance is referred to as the “wage gap” and occurs due to various reasons such as female employees taking time off work to raise children while their male counterparts are paid higher wages for identical jobs.
Women's Retirement - Important Stats
Shockingly, women are losing out on a staggering $450,000 throughout their career due to an average of 30% less in retirement savings when compared to men (Forbes). This is a strikingly large deficit that women must be mindful of as they prepare for the future. Although retirement may seem distant, it is essential to start planning for it sooner rather than later. No matter your age or stage in life, saving money for retirement is a must and cannot be ignored if you want to achieve financial security. Whether you are single, married, or somewhere in between; no matter your age and where you are in life - setting financial goals now will help secure a comfortable future for when retirement comes knocking. Being proactive in your planning will give you the long-term assurance and comfort that comes from feeling secure.
Seven Steps For Women To Achieve Retirement
That’s why women need to plan carefully and make smart decisions about how to approach retirement. Here are seven key steps for making a sensible retirement plan:
1. Start saving as early as possible –
Compounding interest is your best friend when it comes to building wealth over time. The earlier you start saving and investing, the more money you’ll have when it’s time to retire. Put money into a 401 k or IRA and make sure to contribute as much as your employer will match if they offer that option.
Learn more: 401k Rollover Options When Changing Jobs
2. Know your retirement goals and milestones –
It’s important to have a clear understanding of what you want to achieve in retirement, as well as smaller goals on the way there. Estimate how much money you’ll need each year in retirement and then set up a timeline for when you will reach certain milestones along the way, such as having enough saved up to cover your basic expenses for one year. Staying organized and focused on your objectives is essential for success. This can help you remain accountable and ensure that you are striving to meet your ambitions.
3. Take full advantage of tax breaks –
The IRS offers several options for reducing taxes on retirement savings, including Roth IRAs and traditional IRAs. Investigate which type of account would be best for you and take full advantage of any tax credits or deductions available.
4. Make the most of Social Security –
If you’ve worked for long enough, then you should be eligible for Social Security payments when you retire. Although it might not seem like a substantial sum, this can be an excellent way to supplement your retirement income. Make sure that you understand the rules around Social Security and how to maximize your payments by starting them at the most advantageous age for you.
5. Balance risk and reward –
Investing for retirement isn't just about amassing a large fortune - it's also essential to guarantee your funds will keep up with inflation and that they can sustain you through life expectancy. Work with a financial planner to find the right balance of investments that can help you reach your goals while minimizing risk.
6. Build a diverse portfolio –
Establishing an investment strategy is a key component of financial planning, as it enables you to accumulate wealth and guarantee that your retirement years are financially secure. Make sure that your portfolio contains a diverse mix of investments, such as stocks, bonds, and mutual funds. By diversifying your investments, you can spread out the risk and potentially gain returns in multiple markets.
7. Plan for longevity –
Since women often outlive men, it is essential to plan for a longer retirement and make sure you have enough financial resources. Don't underestimate the amount of money required to maintain your desired lifestyle during your later years! Calculate your expected lifespan and factor that into how much you need to save.
Final thoughts -
Retirement planning can be intimidating, but by taking these steps, women can set themselves up for a comfortable retirement and financial security in their later years. With the right strategy and some wise investment decisions, you can ensure that your retirement dreams become reality.
Take The Next Step -
For additional information on how to create an effective retirement plan tailored specifically for women, please contact our team. We’re here to help you make the most of your retirement savings and achieve long-term financial security.
More Important Topics -
Who is the best person to talk to about retirement?
It is my opinion that a fiduciary is the best choice when choosing a financial advisor. What is a fiduciary you may ask? A fiduciary is obliged to always prioritize their client's best interests. Registered investment advisers follow the fiduciary standard, as do CERTIFIED FINANCIAL PLANNERS™. Broker-dealers, who may also go by the title of adviser, generally do not follow the fiduciary standard.
What are your qualifications?
Becoming a CERTIFIED FINANCIAL PLANNER™ (CFP®) is more than just an achievement, it's a recognition of your proficiency and expertise in the fields of financial planning, taxes, insurance coverage, estate planning, and retirement savings. Achieving Certified Financial Planner (CFP®) status is a prestigious honor that requires extensive examinations and experience, granted only by the Certified Financial Planner Board of Standards, Inc. Earning the Certified Financial Planner designation is no easy feat. It requires a comprehensive amount of time, effort, and dedication to fulfill its stringent qualifications such as passing numerous tests, displaying exemplary ethical standards, and obtaining a formal education. The most crucial trait of a CFP® is the dedication to their fiduciary duty, always taking into account what's best for the client.
Which services do you provide clients?
As a CERTIFIED FINANCIAL PLANNER™ (CFP®), I am committed to offering comprehensive financial planning services that will provide our clients with all the resources they need for their long-term success. With retirement, tax and estate planning, investment management, defined benefit plans, and income protection strategies all under one roof - this is the ultimate solution that you need to secure your future. Our team is dedicated to crafting custom solutions that fulfill your requirements and will be with you all the way. Furthermore, we are here to aid you in budgeting and cash flow management, as well as debt reduction strategies that will lead to wealth accumulation. Our mission is to help you attain and sustain your financial goals for the present moment, as well as in years to come.
What is a normal fee for a financial planner?
Most financial advisors charge based on how much money they manage for you. Some financial advisors charge a flat hourly or annual fee instead. Traditional advisors use a variety of fee structures. Some most common fees for service are:
Assets under management fee (AUM) -
This fee encompasses investment management, as well as a detailed financial plan that outlines your goals and how to reach them. With it comes expert guidance every step of the way to ensure you stay on track. However, it's possible to find advisors who charge a fee based on the Assets Under Management (AUM) but provide solely investment management services, not financial planning. One of the biggest advantages is that you will likely have a long-lasting relationship with your advisor.
Flat fee per service –
For those looking for a comprehensive financial plan, some fiduciary advisors offer their services at an affordable, flat rate. You can take charge of your plan and execute it without any outside direction. With this fee structure, advisors offer services for a fixed cost per service rendered. With this service, you'll receive a comprehensive overview of the contents and some useful information to help you manage your finances independently in the future.
Retainer of services -
A flat monthly or yearly cost is typically the norm, and your bill won't depend on how much you have to invest. However, if your circumstances are complicated, then you may end up paying a bit more. This fee covers a broad spectrum of services, including planning and investment management. Your advisor will create a comprehensive financial plan crafted specifically for you, guide you in implementing it, monitor your progress along the way, and make necessary adjustments as needed.
Hourly rate -
Some financial advisors offer a fixed hourly rate, regardless of your current holdings. Get the most out of your budget and pay only for what you need. Investing in this fee involves scheduling some meetings to review the progress of your retirement savings, plan for college expenses and create a budget that works best for you. This is the pay-as-you-go option. Always make sure your advisor has a flexible schedule and will have time to see you when needed.
About William Bevins CFP® -
William Bevins is a CERTIFIED FINANCIAL PLANNER™ and wealth advisor serving Franklin TN. His practice focuses on writing financial plans, offering advice, and building suitable investment portfolios for individuals, small to medium-sized businesses, and family offices. He may be contacted by email at [email protected] or by phone at (615) 469-7348. Go to his website to learn more details. Follow on Facebook.