Women: Don't shortchange your financial future
Saving for retirement can be a challenge, but women face a unique set of circumstances. Work to overcome them with proper planning and financial savvy.
Joan Maloney of Del Mar, California, is a 51-year-old graphic designer and single mom who put her daughter through private school, owns three homes (two she rents out, one she lives in) and is in good shape for retirement. "I've always been a saver," she says.
Denise Beeson, 61, of Santa Rosa, California, is equally financially self-reliant. "Even if you're married, you have to take responsibility for your own financial well-being," she says. "I don't think I've ever fretted about being ready for retirement."
Unfortunately, many women are not as well prepared. According to a November 2010 study from MetLife Mature Market Institute and the Women's Institute for a Secure Retirement, 62 percent of executive women say their biggest financial concern is that they won't have enough money to retire.
Unique saving challenges
It can be more difficult for women to save enough for retirement, because:
- Women often earn less than men.
- Women are more likely to take time out of the workforce to care for family members — putting a dent in their income and giving them less time and money to contribute to their employers' retirement plans.
- Women typically live longer than men, so they need to prepare for additional years in retirement.
The retirement outlook for women is improving, says Michele C. Kocak, vice president of retirement services at Independent Benefit Services in Rockville, Maryland. "Women are getting more involved and taking greater responsibility for their retirement," she says. "It's very encouraging." But there is still work to be done.
Increase your money confidence
For many women who worry about their retirement savings, there's a lack of confidence in their own investing knowledge that underlies their fear. Could this be you? Ask yourself:
- Do you feel confident managing your money? If not, get help. "I found a financial [professional] who was very passionate, and really worked with me to put together a diversified portfolio," says Maloney.
- How closely do you follow the market, and are you concerned about market swings? To learn more, start by following the financial news, or consider taking a class.
- Does your current lifestyle allow you to make adequate contributions to your retirement account? "I've never lived the lifestyle of the rich and famous," says Beeson. "But I have a very happy, full life, and I have my investment portfolio."
Take control of planning for retirement
There are six steps you can take today to help get more control over saving for retirement, including:
- Start saving now.
- Pay yourself first. Each month, dedicate some money to savings before you pay your bills.
- Live within or below your means.
- If available, contribute enough to your organization's retirement plan to get the full match. "I've always maximized the percent of my contribution so I could maximize the amount of money the company matched," says Beeson.
- Automate deposits into the retirement plan, and, consider increasing your contribution.
- Meet regularly with a financial professional.
"I never wanted money to be rich, per se, but more for safety and freedom for me and my daughter," says Maloney, "I knew I couldn't count on anyone else but myself so I did what I needed to do, including saving, investing and living within my means."
With proper planning, you can join Maloney and Beeson in the growing ranks of financially prepared women.
Get engaged with your plan for retirement
Try our interactive retirement planning tool1
Gain perspective about your current retirement savings situation and help you determine actions you may need to take.