Studies indicate women are falling behind with retirement. Here's how you can prepare for a better retirement.
According to all sorts of data, women face greater financial challenges later in life than their male counterparts. A big part of this equation has to do with traditional gender roles that mean that women spend a lot of their potential earning years as care givers, instead of earning money. Not only that, but women often don't negotiate higher starting salaries, leaving a potential $500,000 on the table over their lifetimes.
From the way women invest, to a general lack of confidence with money decisions, to the realities of women's life situations, there are a number of challenges facing women when it comes to retirement.
According to a recent study from Transamerica, only seven percent of women are “very confident” about a comfortable retirement, and more than half of them plan to work after retiring. Additionally, a large portion of women — 45 percent — work part-time, so retirement benefits are not usually an option.
If you want to prepare for a better retirement, there are some things you can do. Whether you are a woman or a man, the suggestions Transamerica makes for improving your retirement prospects are practical.
Seven Steps to Prepare for a Better Retirement
Now is the time to prepare for a better retirement. Here are the seven steps Transamerica suggests you take to boost your ability to retire comfortably, living your desired lifestyle:
- Develop a retirement strategy: The first step is to figure out a retirement strategy — and then write it down. Create a concrete plan that can guide you through the future.
- Calculate your retirement needs: Next, calculate your retirement needs, and figure out what you need to save to make it work. Make sure you are saving what you need to in order to meet your needs.
- Look at your retirement benefits: Are you considering your benefits as part of your total compensation package? Look at your retirement benefits, if you have an employer, and if you don't have benefits, ask about the possibility.
- Participate in your retirement plan: If your employer does offer a retirement plan, you should contribute. Do your best to take advantage of any employer match so that you aren't leaving free money on the table. If your employer doesn't offer a plan, consider opening an IRA so that you are still able to contribute to a tax-advantaged retirement plan.
- Get educated about investing: The good news is that investing doesn't need to be complex. Learn the basics so that you understand how investing works — especially retirement investing. If you want to prepare for a better retirement, you have to invest.
- Have a backup plan: Sometimes, you can't work as long as you expected, or a financial setback might change your ability to save up. It's important to have a backup plan. What costs will you cut first? Can you down downsize your lifestyle? Is it possible to start a side gig? Now is the time to create a Plan B, just in case.
- Talk about retirement: Make sure you talk to your partner about money, and that you are involved in your finances. Consider speaking with a financial professional if you need help determining a direction and creating a good retirement plan.
There's no reason to sit back and worry about retirement. Take action and prepare for a better retirement right now. You'll feel better about the future, and you'll be doing something concrete to solve a financial problem weighing on your mind. Whether you are a woman or a man, it makes sense to look ahead, and take steps to secure your financial future.