Understanding How To Effectively Plan For Retirement When You’re A Woman

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It’s no secret that as individuals we have many differences, and these differences extend to the way we handle our finances. This is especially true when it comes to WHY retirement planning is different for women. There’s an entirely different set of parameters, different needs, and often a different planning style.

The truth is women tend to take a backseat when it comes to the specific details of their retirement planning. The day-to-day happenings of life often cause people to prioritize taking care of immediate needs over planning for retirement.

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It’s never too early for retirement planning for people of all genders. If you’re offered the option of a retirement plan through work (like a 401(k) or, a 457 Plan) ignoring it is passing up free money. If you feel you need a more robust approach, working with a reputable financial professional will point you in the right direction. So, if you’re wondering how to get started, here’s everything you need to know.

Retirement Planning for Moms

Married women and women with children often look at retirement planning as less of a priority. They’re caring for their families, juggling a whole myriad of activities, and often share the breadwinner status. Retirement becomes less of a focus because they’re just too busy.

But what happens if a woman is a single mother, divorced, or widowed? Suddenly, there’s a lot riding on her retirement, which she may or may not have planned for. If, for example, her husband faced a major illness, she could be left with medical bills, a lower income, or less retirement income than she planned for.

The reality is women live longer than men. This has been the case for a long time and continues today. It’s a long future they need to worry about and failing to do so leaves a woman dependent on her kids, or completely without support as an older person.

Social Security Benefits

For women with a family, the focus in their younger years is often on taking care of kids and they end up putting their career behind family and childcare. They pass up promotions at work and take lower paying jobs to spend time with their kids. This affects social security and retirement funds, both based on income.

In her later years, a woman may also care for aging parents. The sandwich generation is a very real scenario for many women, and juggling your own retirement savings while caring for so many family members is a big job.  When it comes to retirement planning for women, they often face a financial obstacle course.

Single Ladies and Retirement Planning

Now, women who are single also have major retirement planning needs. If you’re relying only on your own income to support you in your retirement years, it means you’ll need to pull more money from your investments in the future.

Without the additional income of a spouse or a pension plan from a spouse or partner, you’re on your own to save enough for your care as a person older than 70—and heck, to enjoy your retirement as well! No one  wants to forgo travel, entertainment, and other great experiences when they retire because they’re living on a very fixed income.

Understanding the Wage Gap

When you factor in the challenges faced by both single and married women, it’s obvious retirement planning for women presents obstacles. Then, you factor in the wage gap, which is still alive and well. Women today earn .82 for each dollar earned by men and the gap was even wider for women of color.

Some studies that factor in aspects like part-time employment cite the figure as even lower—.49 on every dollar! Female-dominated jobs (like social work, teaching, or nursing) usually don’t pay as much as the male-centric fields (like marketing, engineering, or technology) leaving women with less to work with, fewer benefits, and greater sacrifices required to meet the needs of their families and lifestyles.

Yet, the retirement costs become a double-edged sword. Women don’t have a higher income, but they live longer. Long life means greater healthcare and insurance costs. Just to give you an idea of long-term care costs, adult day care runs around $20,000 per year.

Assisted living facilities with in-patient care charge almost $100,000 annually and that costs vary by the type of room, meaning, either semi-private or private. Keep in mind that’s not top-of-the-line care either as additional fees are incurred for certain services, including physical therapy, speech therapy, and memory care. These numbers vary state-by-state, and will only continue to increase annually.

The Risk-Averse Approach

The last factor working against retirement planning for women is their own conservative nature. Women tend to be less aggressive in their investments and sometimes this risk-averse approach holds them back; often holding on to more cash than men do. We may shy away from risky investments with higher yields and longer-term payoffs. Holding cash, believing cash is king, but here’s the thing: cash is only king when it’s working for you (not when it’s hidden in your mattress).

Now, this isn’t meant to induce panic. The message here is to take control of your future, your safety, and your retirement planning. There are many factors working against women when it comes to retirement planning, but there are a few important factors in your favor:

  • Women are great at planning.
  • Women are organized.
  • Women are hard-working.
  • Women ask questions to clarify and learn from mistakes.
  • Women often think of the long-term wellbeing of their loved ones.

Use these factors in your favor to spur you into retirement planning. Work past the fear and move into proactive tactics to take control of your future.

Retirement Planning for Women Doesn’t Need to Be Scary

As a female financial professional, I’ve worked with so many women over the course of my career. It’s important to realize you have many allies who want to help you succeed with your finances.

One woman I worked with was the wife of a celebrity. She approached me in the beginning stages of a divorce. She was coming from a lifestyle of luxury, but she had been turning a blind eye to her financial situation. Her (soon-to-be-ex) husband wasn’t taking care of the bills and expenses, it was his business manager. This left her totally in the dark on the details, and she was basically thrown to the wolves.

We started at the very foundation of building up her finances. She realized after having everything done for her previously, she needed to become self-reliant. Not having control over her money or a solid handle on her financial picture was a very scary place for her to be. Together, we worked to get her on track.

You never know what someone’s financial situation is behind closed doors. When it comes to our finances and retirement planning—especially for women—if we’ve never faced it before, the financial overwhelm (just thinking about it) is very real. Focus on the steps you need to take to get a firm grip on your retirement plan.

Don’t Delay

The biggest message you should take away from this post is that when it comes to retirement planning for women: DON’T DELAY!

Don’t put off your retirement planning any longer. Whether you’re in your 30s, 40s, 50s, or beyond, there’s no time like the present to get started. By delaying, you’re facing the costs of waiting and you’re taking on more and more risk. As the timeline for retirement moves further and further from view, your financial picture gets even scarier.

You don’t want to be forced to retire later, work a part-time (or full-time) job in your retirement years, or compromise your plans and lifestyle. Prepare today so you get the future you want.

The best way to figure out your retirement plan is to think with the end in mind, then figure out the steps to get there. Examine the different types of retirement plans. Break the retirement planning process down into manageable steps you can easily track each month and each year. This will keep you on track for your bright future!

Don’t Feel Embarrassed

The woman I mentioned above was very embarrassed when she approached me. She felt ashamed she didn’t have a clear idea of her finances and that she’d left her money management to someone else.

There are many reasons why you may feel hesitant to talk to a professional. Maybe you worry you don’t have enough saved. Perhaps it feels too personal and you aren’t comfortable talking about finances. Maybe you don’t know how to verbalize what you need, even though you know the ultimate outcome you want.

As someone who’s worked with investors at all levels, let me say—there is nothing to feel embarrassed about! Whether you have $500 to invest, $5,000, or $500,000, there’s no time like the present. Every day that passes is one day you aren’t progressing toward your retirement plans.

Another common statement I hear from people is, “I wish I’d done this sooner!” Don’t wait. A professional should work with you on your terms and help you feel comfortable. If they don’t, there are plenty of financial professionals out there who will!

Ask Your Friends

Sometimes, it’s simply a matter of not knowing where to go or who to talk to. This is a common obstacle, but it’s certainly one that’s easy to overcome.

Start reaching out to your network, your trusted friends, and family members. Ask them who they use for investing. Who do they trust? You don’t need to divulge too many personal details (and I wouldn’t) if you don’t want to, simply ask for a few referrals. Once you have the names of a few professionals, interview them and find the right fit for YOU so you’re working with someone who you trust completely.

Once again, a professional should approach planning for retirement with a team approach. You should feel as though you have someone working for you and more importantly, WITH you so you’re never left in the dark.

Find a Professional You Can Work With

The most critical piece of retirement planning for women is finding someone they can work with and trust. I would tell women I worked with that they need to keep their comfort in mind. You want someone who feels like a partner and has your best interest in the forefront versus their own.

When I had my own practice, I found there were a few, very specific, demographics that always flocked to me—single women, engineers, and L.G.B.T.Q.I.A.+ couples. I found this was due in large part to my style. I tend to be decisive, which was the quality engineers appreciated. They often were seeking more and more information but could never pull the trigger. I would tell them, “it’s time to make a decision” and at that point, they did.

L.G.B.T.Q.I.A.+ Couples

Similarly, with L.G.B.T.Q.I.A.+ couples, they often had a double income and big goals to match, but wanted to work with someone who was open and understanding about the financial challenges presented by a partnership (this was before gay marriage was legal, and it was tougher to navigate retirement). For single women who sought me out, it was because they wanted to work with another woman who they could really trust.

The point is, find someone who you can work with, who understands your needs, and who’s willing to steer you in the right direction when you need help (or a push). It’s most important that your financial professional understands “you” so they fulfill all your retirement planning needs.

Do Some Homework

Before you approach a financial planning professional, you may feel more comfortable if you do a bit of homework (but don’t get so bogged down in the nuances that you continue to put it off).

Check out the personal finance and investing materials we carry in our Resource Library. Simply add your email to become part of our community. By joining, you’ll get access to all the great worksheets, workbooks, and resources in one easy place!

You may also want to use a basic retirement calculator to help you get a full picture of your current trajectory and where you need to aim to comfortably retire by your goal date. If you don’t get an answer you like, it’s all the more reason to work with a professional who will help you navigate the system to invest wisely.

Always Know Where Your Money is Going

Perhaps you haven’t handled your finances before. Maybe you’re recently divorced or widowed and thought you’d never need to deal with retirement. Many women assume their finances will be handled for them, so they take a hands-off approach until they must face it. One piece of advice I often offer is no matter how successful you may become, always sign your own checks. That way you always know where your money is going.

Keep a Vision of Your Perfect Retirement in Mind

Retirement looks different for everyone. I knew one woman whose idea of the perfect retirement was downsizing. She decided she wanted to move onto a sailboat. It was her dream to let go of most of her possessions, live on the boat, and sail whenever she wanted. So, with the right retirement plan, she did just that. She bought herself a beautiful boat, parked it down in Marina del Rey, and is enjoying life on her terms.

There’s no right or wrong way to retire. The definition is different for everyone. Some people retire from their full-time job and work part-time for the daily activity and interaction with others. Others want to spend time with family and friends. Others travel or have adventures.

Whether you’re traveling around the world or living on a beach (or a boat), choose your vision of retirement. With the right retirement planning, you’ll find the freedom and individuality to do what you want for the rest of your life!

Your Journey to Financial Success is Unique

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Once you get your budget rolling, check out my post on 6 Simple Steps to Get Financially Organized. This post also includes a helpful checklist available in my Resource Library (free to access).

Admittedly, this particular checklist has a larger-scale focus on your overall financial picture, but I genuinely feel that getting your finances organized is essential.

I’m so excited to invite you to join our Financial Success Society Waitlist! Our enrollment opens soon (so don’t miss a chance to get on the notification list). Your journey to financial success is unique and with this exclusive membership, you’ll receive the guidance you desire, enabling you to move financially forward, no matter where you are in your financial journey. At Making Cents Count, we offer an array of outstanding products and services to help you get control of your finances so they won’t control you!

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