If you’re single, a mother, a sister or a daughter are you saving for retirement? Your first-instinct-answer is probably yes, but is that really true? We all want to stop working someday and we may be putting a little money aside here and there, but is that really planning for retirement? The answer is no, it’s not.
You may be shocked to know that not a lot of women are planning for retirement. According to Marie Claire magazine only 53% of women have actually started saving for retirement. The lack of retirement savings in a woman’s bank account can be for a number of reasons. It could be because we have other goals to achieve before retiring, maybe it’s because we think our spouse will take care of the finances or it could be because all our extra money goes towards our children.
Those are all good reasons to spend money (well maybe not relying on your spouse), but they aren’t excuses to neglect planning for retirement. Marie Claire magazine also says that 20% of our after tax income should be put aside for savings, including retirement savings. Take a second and go back to your last paycheck and look at how you spent the money. After bills and living expenses were paid did you put 20% into savings? If not don’t worry, you can start with the next paycheck.
The lack of savings stops today. Get a pen and paper and start making notes of all the things you can live without in order to boost your savings and start putting 1/5 of your paycheck (after tax money) into a retirement savings account.
Here are the steps you need to take to start planning for retirement:
Start finding extra money
If you live paycheck to paycheck and find yourself without any disposable income the day before pay day the first step is to ask yourself why? Maybe you don’t make enough money to support your lifestyle. That’s a fair statement, but then something has to change: either you need to start making more money (i.e. get a second job) or stop spending so much. The ladder is the easiest.
Have a look at your spending and start making cuts. Maybe you can live without a $99 per month cable package and settle for an $8 per month Netflix subscription. Avoid eating out more than once a week and wake up five minutes early to brew your own coffee so you can skip the Starbucks. Once you start looking you will be surprised at all the places you can save money.
Set realistic goals
According to Forbes one of the biggest mistakes women make when planning for retirement is comparing themselves to men and not setting realistic goals when it comes to the time horizon.
“Although women are expected to live longer, they tend to plan for about the same period of time as men. In fact, both groups often plan for too short a period, but the magnitude of the shortfall is greater for women. It is further compounded by the fact that women average lower pay and have fewer years in the labor force than men. This makes it harder to grow their pensions and Social Security benefits.”
Open a retirement savings account
If you don’t have a retirement account yet it’s time to go to the bank and open one. While you’re there talk with a professional to discuss your investment goals, retirement objectives and savings ability. Creating a retirement plan with a professional can help you be realistic about and hold you accountable for your savings goals.
Set up automatic savings
Now that you’ve cut expenses and found extra money to save the next step is to actually start saving it. While you’re at the bank talking to an advisor about your retirement planning goals ask them to set up automatic deposits from your checking account to your savings account on a regular basis. Transfers that coincide with your pay schedule are the easiest to manage and it always ensure there’s money in your account to save.
Voila. That’s it. Just four easy steps and now you’re on your way to a happy retirement.