This is a guest post written by Nelly, who writes at My Way of Viewing about topics that deal with personal finance. Thanks, Nelly, for sharing this topic with us! To get in touch with her, please visit her blog.
It is a proven fact that women are still lagging behind on saving for retirement and a secure financial life. The average retirement savings of women are much lower than that of men.
As per a report published in “Workplace Benefits Report”, more than 70% of women are worried about their retirement savings, whereas only about 58% of men are worried about their retirement.
Let us discuss how women should manage money efficiently and make proper retirement planning to have a secure financial life. But before that, let’s talk about why it is more important for women to save for retirement and why they usually can’t save more.
It is a statistical fact that women usually live longer than men; so they need to support themselves for a longer time after they retire. However, women usually face certain challenges in life that can make saving money a bit difficult.
Moreover, on average women earn less than men and female unemployment is much higher than male unemployment. Women may also have to shoulder more responsibility to look after the home and children, so they often have to compromise with the working hours.
Here are some tips for all you women to save for retirement and have a secure financial life.
Plan a realistic budget and save more
Budgeting! The key to every financial management. First of all, you need to plan a realistic budget to save as much as you can. Saving is the most essential part as you need to have money to invest for a better return in the future.
After you plan one, you can track your expenses and restrict yourself from wasting more on things that don’t matter too much. Actually planning a budget helps to use the money for things that matter the most to you.
Plan your short-term and long-term goals
If you don’t have goals, you can’t be sure whether or not you’re heading in the right direction. So, have short-term and long-term financial goals to assess your success.
For example, calculate and decide the minimum retirement savings you need to enjoy a comfortable life. While calculating this, keep in mind the inflation rate that you’ll have to consider.
Once you plan your goals, break it down into smaller steps which you can achieve within the deadline. This way, you can assess your progress.
Start early to save more for retirement
If you start early, you’ll be able to save more. That is the power of compound interest.
So, if you’re in your twenties and thinking you shouldn’t have to worry about retirement, then you’re wrong. The financial advisers suggest starting saving for retirement right from the month you start earning.
You can start depositing in a 401(k) if your employer matches contribution. Let the money grow until you attain your retirement age.
Open a spousal IRA for retirement fund
If you have left the workforce but your spouse is already working, then you can consider opening a spousal IRA (Individual Retirement Account).
You can save up to $6,000 in such an account if you’re less than 50 years. If you’ve crossed 50, you can save an additional $1000. However, you can’t invest more if you’re over 70 and ½ years of age.
Become the primary beneficiary of your spouse’s retirement fund
No matter how weird it may sound, you need to make sure that you’re the primary beneficiary of your spouse’s retirement fund. Talk to your spouse about this and ask him to make you the beneficiary.
The beneficiaries mentioned in the retirement documents get precedence over the people whose names are in the will.
Try to remove obstacles as much as you can
One of the main obstacles to retirement planning and saving is debt. So, when you’re making your retirement checklist, make sure you get rid of debts, if any, as soon as possible.
If you are in debt, all your savings will go towards reducing your debt burden. So, try to repay it as fast as you can, so that you can use your savings to grow your retirement fund.
If you’re struggling to make the mortgage payments, refinance it with a more suitable home loan. If you have credit card debt, you can pay it off as per your financial condition.
After you get a job, try to pay off your student loan before you need to shoulder more responsibilities.
Purchase adequate insurance policies
To have your retirement fund secure and untouched even after retirement, you need to have adequate insurance coverage.
So, you can talk to a financial adviser and purchase required home insurance, car insurance, and health insurance. You also need to have a life insurance policy so that your dependents can continue with their present lifestyle when you won’t be around.
You can also invest in an HSA (Health Savings Account) to enjoy a high deductible plan with tax-deferred growth, tax-deductible contributions, and tax-free withdrawals for your health care expenses. After you become 65 years old, you’ll only have to pay tax if you withdraw amount for non-medical expenses.
Have an emergency fund with a substantial amount in it
You should have an emergency fund so that you can tackle emergency situations without falling into debt. If you have an emergency fund, try to save about 5-6 months of your living expenses. Doing so, you can use your emergency fund during a financial emergency and can avoid falling into debt.
To start an emergency fund, start by saving at least 5% – 10% of your monthly earning. And, another important thing, do not use this fund unless it’s a real emergency like a medical issue or a car break down.
And after you have you used your emergency fund, try to replenish it as soon as possible.
So, as a woman, what steps are you taking to plan a secure retirement?
Let’s keep living a great life … with the help of money. So what’s next?
- You can travel for free by using rewards credit cards.
- You can get motivated and get out of debt.
- You can check out the next post or the previous post and continue to learn.
But no matter what you decide to do, let’s leave the ordinary behind and take action today!
