Women make up 47% of America’s workforce, according to the U.S. Department of Labor1. The Labor Department projects that number will grow to 51% of the workforce by 2018, yet working women are more likely to retire with fewer assets than their male counterparts.
Some of the reasons for this are laid out in an article published by MoneyTalksNews.com2. It’s a numbers game, and the numbers don’t look as good for working women as they do for their male co-workers.
- Women in the workforce are more likely to work at part-time jobs that don’t deliver benefits like a 401(k) or a pension plan.
- On average, women work fewer years, taking time off from their careers to raise a family or take care of elderly relatives.
- Because they work fewer years, women usually receive fewer promotions and raises.
- The median weekly income for women is $669 compared to the median income for men, which is $824 per week1. This impacts everything from their ability to save for the future to the amount of Social Security women receive each month in retirement.
- Women tend to live longer on average, which means they’ll require retirement income longer.
- Half of all women worry that they’ll run out of money as they move further into retirement2.
The numbers speak for themselves, but there are things women of all ages can do to improve the chances for a long, worry-free retirement. However, it takes careful planning.
Create a Plan For The Future – NOW!
It’s never too early, or too late, to plan for a brighter future. However, the earlier you start preparing for retirement, the more time you have to save.
- A good place to start is to determine how many years you plan to work before you reach retirement age. Do you plan to retire when your spouse leaves the workforce? Might you retire early to care for elderly parents and other relatives? Make an educated guess on how many years you have left to work.
- Do you plan to take time out to raise a family? If so, you’ll earn less during your working years. It’s a difficult trade-off – one many younger, female workers must consider, even if retirement seems a lifetime away.
- Do you have big plans for your retirement? A world cruise? Going back to school? Expensive hobbies? Or do you see yourself living a simpler life – a less expensive lifestyle? Plan today for the future you want tomorrow.
- Prepare an estimate of what it may cost to live the life you envision. For example, will your home mortgage be paid off when you retire? Will you have other sources of income, like rental income or an inheritance?
- When calculating future expenses, be sure to factor in the impact of inflation. If inflation averages 3% a year, and you plan to retire 20 years from now, you can expect living expenses to increase by 60% when you’re ready to kick back and enjoy life.
Evaluate Your Current Circumstances.
Some of us are savers. Some of us are spenders. We all manage money differently, so evaluating your current situation can be invaluable in developing a retirement plan for the future.
- Do you set aside a portion of your income for retirement? If not, start saving now. If your employer offers a savings program, like a 401(k), take advantage of it. Max out your contributions to a work-sponsored savings program, even if it stings a little when you see your paycheck.
- Open an individual retirement account (IRA). Click here for more information on your options.
- Do you carry a lot of debt? Pay down your credit card balances as quickly as possible so you’ll have more money available for savings.
In the next article in our series on how women can prepare for retirement, we’ll look at ways to play catch-up and close the gap between what you have and what you’ll need in the years ahead.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.
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