Planning for retirement is a challenge, no matter who you are. However women face a series of unique obstacles when trying to put enough money away for later in life:
- Women live an average of seven years longer than men, which means we need more money for retirement.
- Women often have children and spend more time out of the workforce – five years off work can equal $150,000 of lost income.
- Women earn only 73% as much as men over the course of their lives. Median income for men is, on average, about $10,000 more than women, according to the U.S. Census.
- This income disparity is a $10,000/year handicap, or $400,000 over 40 years.
These factors are amplified by any down turn in the economy. Every American is faced with less disposable income, the possibility of job loss, fewer available jobs, decreased home value and a higher cost for essentials.
So, what can you do? Make an effort to start planning your financial future as early as possible but remember, it’s never too late to start developing your strategy and retirement plan. Here are some tips for women at every decade of their lives:
Twenties – This is the decade of compound interest. Take advantage of your youth to save and earn compound interest for many years. Avoid debt temptation at all cost. Finish your education – income for college grads is twice that of those who don’t attend.
Thirties – The decade of homes and investments. Learn about the home buying process, understand costs and benefits, invest in a home if you can and haven’t already done so. Set up a plan for your children’s education – if you wait too long, you may be forced to borrow from your retirement to pay for your kids’ school.
Forties – The decade of the safety net. Maintain good health and live within your means. You are now middle aged! An emergency fund is a must, not a luxury. Try to put 50% of any tax return in savings. Be well-insured with life, auto and disability to avoid unexpected financial hardships.
Fifties – The decade of flexibility. The largest increase in personal bankruptcies is normally with 55+ year olds. Keep up with technology so that you are marketable, maintaining your skills and developing new ones. Be flexible and open to new ideas.