If you’re like many women at this age, you are worried about how you will ever be able to retire. As women, we tend to have less retirement savings than men while needing more to fund a longer retirement due to our greater life expectancy. You may have left the workforce for a time to raise a family and haven’t saved as much as you wanted. Or a divorce may have resulted in a loss of a big share of what you did have saved. A Merrill Lynch study from 2017 reported that 41% of women say their biggest financial regret is not investing more of their money. But don’t despair! There are a number of steps you can take even now, even if you are well over 50.
First, assess your lifestyle, including your sources and amounts of income (and for how long you expect these to continue), and especially assess your spending habits. Accept the fact that you are going to have to make some changes here. Many people find that in the absence of a plan, they have allowed their lifestyle to consume all raises, bonuses, and other increases in income.
Have you allowed salary inflation to inflate your lifestyle spending? You may have bought a bigger house, a luxury vehicle, and expensive clothing. Do you take lots of vacations or spend on multiple beauty treatments and shortcuts? Do you give your children money whenever they ask with a good reason? Now is the time to decide which of these is truly important to you and find ways to reduce your spending, thus creating some free cash flow for savings.
The changes you make today will stay with you in your later years. This doesn’t mean sacrificing something important to you, such as regular travel across the country to visit family; it means evaluating your spending, so you use your money for what is truly important to you.
This exercise may, for example, allow you to see that you could downsize sooner rather than later. Living in a more modest home frees up funds for saving. You might decide those vacation trips are not what’s important, but it’s the time off to recharge that is important, and you can do that in a more economical way. Challenge yourself to be a fashionista on a budget instead of always buying high-end designer wear. For example, challenge yourself to find inexpensive, unique gifts when planning your holiday shopping. Look at everything in your budget and really consider what’s important to your happiness.
It’s tough to say, but you need to deal with debt. Debt at this stage of life is usually a sign of overspending, so be brutally honest with yourself about what all that debt got you. If your debt is from medical bills or student loans, that’s one thing. But if your debt is credit card balances as a result of shopping, traveling, dining out, or buying gifts, you need to take a hard look at your spending relative to your income.
On the income side, consider a side gig! There are many opportunities to do this, and starting now will give you time to find one that fits your passions and can continue for many years. Not only can this be a source of income now that you can use to increase your savings, but it can also be a source of income later. This minimizes what you need to take out of your savings to supplement any known income sources in retirement, such as government or private pensions and Social Security.
In the event you are forced out of the workplace for any reason, it can be an established income stream. Most of these opportunities will also require you to be out and about, interacting with people regularly, which is known to benefit us as we age. Plus, many product companies have regular conventions where their consultants gather, and attendees report these are the most fun “vacations” they have ever taken!
Next, try to work as long as you can. Keep your skills current, keep your attitude positive, and do everything in your power to stay employed. It is much easier to keep a position than to find one at this stage of life. Throw out the old thinking of a certain age being when you have to retire, because of tradition, or because that’s when you can begin to collect a retirement income like Social Security. The longer you work, the more time you have to save, the more your expected retirement savings grow, and the less time you have to depend on those savings once retired. And work can keep you young!
Another benefit of continued work is the opportunity to continue tax-deferred savings in a company-sponsored retirement plan. If you aren’t putting the maximum allowed in your company-sponsored plan, use those newly found dollars from your budget analysis to up your contributions now! And no matter what, you simply must put in enough to get any match offered by your employer. If your employer doesn’t offer a company-sponsored plan, other investment types are available to you. And if you are the owner of a small business, talk to your tax advisor about establishing a qualified retirement plan today!
Finally, but perhaps most importantly, in your retirement plan savings, as well as those you handle separately, don’t be too conservative. That same Merrill Lynch study shows that while women are confident in most financial tasks, only 52% say they are confident in managing investments. Don’t let that lack of confidence lead you to be too conservative. It’s likely more a lack of financial education than anything that erodes your confidence. After all, you have managed a household, raised children, had a fabulous career, or done any number of things with confidence, so get that financial education!
There are any number of resources you can take advantage of available in any learning environment that you are comfortable with. Consider getting professional help at this critical time. Many advisors offer low-cost planning services. You don’t have to be wealthy already to take advantage of some of the services out there today. These might be the best dollars you spend toward this goal if you are lacking confidence about the steps you need to take. But whether you create your own plan or get the advice of a professional, make a plan!
So to summarize, reign in your spending and start saving, keep working to have income, and get help investing. With a little work and consideration, retirement savings can happen!
“Rosemary Wright, CFP® is a Senior Financial Planner and Co-Director of Women’s Services for National Wealth Partners, LLC. The information contained in this article is provided for informational purposes only. It is not intended to provide investment, tax, accounting, or legal advice. Be sure to first consult with a qualified Investment Advisor Representative or tax professional before implementing any investment strategy.