We’ve all heard about the gender wage gap. But what about the retirement gap? We contribute $1,331 to our retirement accounts every year.
That’s only half as much as men. And since we have more golden years to look forward to, we ladies need some extra gold to get by. That’s why it’s never too late to start planning for retirement if you’re a working woman.
Irrespective of whether you are married or single, retirement planning helps you attain a secured life at old age. You can easily save money on grocery shopping, while dining out at restaurants and by adopting some of the very unusual ways. This money could be saved for your post retirement life.
Keep those gray hairs at bay and stop worrying. Retirement planning is easy. Here’s how.
1. Demand Your Fair Share
The more you make, the more you save. But that’s more difficult for women, seeing as we make 20% less than men in the same occupation.
Don’t be afraid to head to the negotiation table and demand the salary you deserve. Make a strong case for yourself based on your accomplishments at the company.
The worst thing you’ll hear is “no.”
2. Follow a Budget
Without a budget, you’re leaving retirement savings to chance. You don’t have to.
Plenty of budget apps and programs are available, but there’s nothing wrong with an Excel worksheet. Track your monthly income after taxes as well as all expenses.
Now you’re ready to set yourself up for success. As a rule of thumb, 10% of your monthly income should go towards a savings account. Struggling to reach that number?
That’s why you should budget. You’ll discover categories where you spend far more than you should. By trimming these discretionary expenses, such as fast food or streaming services, you can funnel the money Into your savings allocation instead.
3. Invest, Invest, Invest
Albert Einstein called compound interest the 8th wonder of the world. The concept is simple. The interest you earn becomes part of the principal balance, and then also earns interest.
In short, it’s the interest you earn on previous interest payments.
Neither men nor women will find success trying to shore up retirement savings without investing. Compound interest is an essential part of the equation. And the sooner you start, the more time you have to earn compound interest.
Your employer’s 401K plan should be your main focus, especially if they match your payments. But few businesses still offer these plans. Instead, open your own individual retirement account and start saving.
4. Calculate Your Retirement Needs
During retirement, financial pundits suggest you shave off about one-third of your current expenses. That means your retirement savings need to cover 70% of what you’re making now. Have enough?
That’s the question. Remember that in addition to your retirement savings accounts and investments, you’ll also gain Social Security payments. Since women are paid less than men, these tend to be less than you may think.
Wherever you are in your journey to retirement, check out this retirement calculator to see where you stand.
Retirement Planning for the Working Woman
It’s true that a working woman faces more financial challenges compared to the working man. But we have to take retirement planning seriously, even if it’s unfair. If you start early and keep this advice close to heart, comfortable retirement is not only possible — it’s easy.
As a working mom, you know money can get tight. Check out my finance section for more financial help.