Money, Money, Money!!
Now that I have your attention, we collectively work our entire lives in some capacity. Whether you focus on raising a family, and/or soaring through your career, you have put in lots of strenuous hours and would like to reap the benefits in your senior years. But how exactly do you do that? Rely on the man in your life for his pension? Contribute to your companies 401k ? You are self employed and have opted for a SEP IRA, or put money in a ROTH IRA? Or maybe you have no flipping idea what any of this is??
Let me tell you, you are not the only one.
Below are some crazy statistics about money, savings and retirement when it comes to women.
- 72% of women are saving for retirement; 80% of men are
- 75% of women offered a 401(k) or similar plan are participating in it; 79% of men are
- Women who participate in a 401(k) or similar plan contribute 6% of pay (median); men contribute 10% (median)
- 56% of women are very involved in monitoring and managing their retirement savings; 70% of men are
- 51% of women say saving for retirement is a financial priority, but 62% of men do.
- In the past five years: only 55% of women are now confident about retiring comfortably, while 68% of men are.
- 43% of women believe they are building a large enough retirement nest egg, while 59% of men believe they are.
- Lifetime health care costs for a 65-year-old woman living to 89 will be $314,673, on average, compared to $267,395 for men.
These statistics provided by 17th Annual Transamerica Retirement Survey are depressing. Where did we go wrong? We are amazing human beings, doing some incredible things but why are the statistics against us? We had to take the same math classes in high school as our male counterparts. The same classes were required for our degrees as men. The information is out there, why are we not on top of our financial future?
Our priorities are different.
We can all agree that women prioritize differently than men. We are concerned about how many ounces our baby is fed at meals, we are so knee deep in household chores, dry cleaning runs, grocery shopping, and making sure we tackle our to do list daily. Men’s focus is elsewhere, mainly when they are the breadwinners, it’s on MONEY. Which is great in theory. That is what a partnership is about after all. You excel in your areas and he excels in his. But what happens when you don’t have a male partner? Or your male partner loses his job? Same could be said in reverse. But one can learn quickly how to take over the household chores and run the errands, but you cannot pull money out of places, if there is no money there in the first place.
I am living proof of how neglecting my finances has put me back 10 years. My company does offer a 401K and matches up to 6% , but I am no where near where I should be. I personally would like to retire on the beach and enjoy sunrises and sunsets in the luxury of my waterfront home. So I need to be realistic when it comes to how much that is going to cost.
Unfortunately, there are so many factors working against us. Women get paid roughly 79% of men, we take time off to care for our children, we are not confident in what we bring the table and our focus is generally not on money. That gender wage gap is a real slap in the face but something we can work to overcome.
There are many ways to grab hold of your finances and start to focus on the years to come. You may be financially sound, but there is always an opportunity to learn more and invest smarter.
- Debt- this sucks. You have your good debt (home/car) and your bad debt (credit cards/unpaid medical expenses) Either way, you owe money to someone who is not you. If you are in an exorbitant amount of debt, your focus now should be to get rid of it, pay it down and stop paying the ridiculous interest fees. All those fees could translate to the chair, that you sit on, at your beach house, in which you retired to. (Don’t worry as I write this, I have some debt that needs to be taken care of as well, I am in no way some financial guru) Questions on how to do this? debtfreedivas.org has a lot of great tips and a community to share with and find solutions. Guess what? It is all about women over there!
- KNOW THINGS! Know how much you need when you retire. It is one thing to understand the importance of retirement savings, it is another to know HOW, and HOW MUCH. https://retirementplans.vanguard.com/VGApp/pe/pubeducation/calculators/RetirementIncomeCalc.jsf Here is an incredibly beneficial calculator, to help understand how much is needed. Yes, this number is scary AF, but you can also get there! Here is how….
- 401K retirement plans through your company. If they match your contributions, even better. Select the highest percentage you can afford and watch as the months go by and your retirement cushion grows. And to top it off, these contributions are tax free! That means, you are taxed at a lower rate because that money is not recorded as taxable income! WHAT??? Win win!
- No 401k provided by your employer? No problem. There are SEP IRAs (for business owners) and Roth IRA’s for anyone. These can be set up at your local bank or online. Easy Peasy. You can select any amount to be added, and set up the frequency. This is a great option, if you know anything about investments this can give you room to invest in the companies that you love. Aspiration Bank offers some new investments, they focus on the environment and have a great yield. They are an online bank that is really keeping up with times. They are very customer and industry focused.
- What I am able to tell you is so GENIUS, that I cannot even right now! You know how the healthcare industry is a hot mess right now? Insurance is causing problems left to right. To off set the increase in premiums, companies are moving towards high deductible plans, with an emphasis on HSA (Health Savings Accounts). Which allows you to keep a somewhat manageable premium per month but have a “health savings’ to pull from for things like copays, prescriptions, hospital stays etc. Many people put a lot of money in these accounts, and the funds end up not being used. The funds are available for roll over for the following year but if you have already budgeted for the HSA for the upcoming year, why not invest the unused funds in your retirement account? “LIGHT BULB” These are pretax funds, so you will still get a tiny tax break, and they can help so much more in the long term for your retirement goals!! #genius
- Finally, if all of this is a little too daunting look into finding an adviser. A fee-only Adviser to be exact. Many financial planners, get paid on commission, and while there expertise is amazing they are swayed to promote the higher commissioned product. Which could be amazing for you but also could be not exactly what you are looking for. Either way contacting someone who knows about financial well being is a great start.
Take responsibility for where you are financially today. It is never too late to change your financial course and provide a nice cushion for your golden years. After all ladies, you work hard, you deserve a nice retirement. Preferably on the beach with a cocktail in hand, cucumber on your eyes and a cabana boy at your beckon call.