When it comes to having enough money to retire, women are at a significant disadvantage compared to men. Although men and women start saving at roughly the same age, women’s median total retirement savings typically are only 30% of that of men’s.
In addition to the gap in total savings, women are less likely to feel confident about having a financially secure retirement compared to men, and 50 percent plan to work after age 65, according to the latest study from the nonprofit Transamerica Center for Retirement Studies®,
Despite these challenges to having a comfortable retirement, there are many things women can do to get in a better position to retire or keep working voluntarily.
Save ASAP and save consistently
Seventy-two percent of women have started saving for retirement, but if you’re not one of them, not all is lost. Resolve to start saving today, even if it’s a small amount. Just saving $20 a week could yield $72,600 in 30 years (assuming a 5% annual return).
One way to trick yourself into saving consistently is to set up regular automatic transfers from your checking account to a Roth or traditional IRA. You’ll be surprised how quickly savings can add up when you don’t have to remember to set them aside.
Take advantage of “free” money
Speaking of tricking yourself into saving, consider signing up for your employer’s retirement program if you haven’t already, and if they offer a match on your contributions, make sure you’re getting the maximum match percentage — otherwise, you’re leaving free money on the table.
And speaking of free money, find out if you’re eligible to claim your Saver’s Credit when you file your federal taxes.
Get real estimates for your retirement goals
While both men and women estimate they’ll need $500,000 in retirement, women are far more likely to have “guessed” at that figure. Instead of flying blind, use a free tool like Kiplinger’s Retirement Savings Calculator to get an accurate estimate of how much money you’ll need. Although that number might seem intimidating, remember it’s definitely attainable over many months and years, especially if you invest that money wisely.
Have honest, frequent conversations about money
Money is a major source of stress in American relationships, but not talking about it makes it worse. Start the conversation with your partner around daily expenses and budgeting, and also discuss what you want your retirement to look like and how much money you’ll need for it. Share your estimate from the previous step or build one together.
Build a healthy emergency fund
While most men have at least $10,000 in emergency savings, most women have only $2,000, making women much more unprepared for inevitable life upheavals like a job layoff or major medical bill. The solution? Like retirement savings, you can set up automatic transfers to your savings account. Personal finance advisors recommend saving three to six months’ worth of expenses depending on your financial and familial obligations.
Shore up your skillsets
Many women are planning to keep working late in life — either out of enjoyment or necessity. Stay up-to-date on your skillset or learn something that interests you through traditional or online classes at colleges and universities or sites like Lynda and Pluralsight. With offerings on everything from computer programming to business leadership, you might even consider making a career change. Check with your employer or even your local library, as you might be able to get free access or discounted tuition.
About Transamerica Center for Retirement Studies®
Transamerica Center for Retirement Studies® (TCRS) is a division of Transamerica Institute®, a nonprofit, private foundation. Transamerica Institute is funded by contributions from Transamerica Life Insurance Company and its affiliates and may receive funds from unaffiliated third parties. For more information about TCRS, please refer to transamericacenter.org.