As women continue to break the glass ceiling in the working world, they also need to keep in mind their potential vulnerability in the financial world. Women tend to be more concerned about monthly expenses than saving enough for retirement, according to a recent survey sponsored by the Retirement Services Division of Massachusetts Mutual Life Insurance Company (MassMutual).
But the reality is that women often live longer than men, and therefore will have to figure out how to stretch retirement dollars longer, says Elaine Sarsynski, executive vice president of MassMutual’s Retirement Services Division and chairman and CEO of MassMutual International LLC.
Only 39 percent of women report being confident they know how to calculate how much money they will need in retirement, according to the nationwide survey. And compared to men, women were less likely to increase portions of income saved through work retirement plans, or contribute to a regular IRA account.
“Women need to pay attention to personal finances, because one way or another there is some likelihood they will be doing it alone,” says MassMutual Financial Professional Robin Weingast. “More than 50 percent of women age 75 or older live alone, and the median income of women 65 plus is now $15,000, according to the U.S. Department of Health and Human Services 2011 report on older Americans.”
Sarsynski says it is also troubling to note that when people retire early, they are often doing so for negative reasons like declining health, disability issues or unemployment. A 2012 Retirement Confidence Survey by the Employee Benefit Research Institute and Mathew Greenwald & Associates found that to be the case for 50 percent of their respondents.
“If you are a woman in this situation, you may be even less prepared to handle such a sudden challenge,” Sarsynski says.
For women in all stages of life, here are some financial aspects that should be reviewed and added to a retirement planning program:
Bank Accounts
If you’re married, sharing joint bank accounts can help highlight how the family income is spent. Chances are you and your spouse don’t earn exactly the same income. Some couples decide to split expenses evenly, while others appropriate the larger income toward the larger bill payments. Whatever you choose to do, consider creating a personal savings account in addition to the household financial contribution responsibilities you already have.
Deal With Debt
Debt accumulation can cause a strain on a spouse’s credit – and finances – even if it happened prior to the wedding. Determine if you will be held responsible for your spouse’s prior debts, and if so, to what extent? If you are able to keep your prior debts separate, it will help to ensure each other’s property remains out of reach of creditors, protecting your individual credit ratings.
Prepare for Retirement
On average, women tend to spend 12 years out of the workforce due to caregiving responsibilities for children, parents and spouses, according to the U.S. Department of Labor. To top it off, women typically earn 77 percent of what their male counterparts earn. This traditionally results in women contributing less to retirement via 401(k) accounts, or receiving less through pensions and Social Security benefits. Because of these factors, women need to start a retirement planning process earlier in life, either setting additional money aside, or meeting with a financial adviser to discuss options.
Get Adequate Insurance
Even with a great retirement plan in place, unplanned factors can impact savings. Disability income insurance can provide a source of income in the event you are unable to work because of an accident or illness. And life insurance can help provide financial security upon death by providing funds for children to attend college, or to help continue with mortgage payments.
Maintenance
Make sure to keep retirement savings and insurance on pace with income. It’s important to keep your retirement savings on par with what you earn. If you receive a raise, consider using a portion of that money to increase your contribution to your 401(k) plan. The same goes for disability income insurance protection. As your income rises, so should how you allocate funds to protect it.
Taking a good look at personal long-term plans can help women be better situated for their futures financially. Retirement is an option for all women no matter their life situations, and can become a reality with good planning. (ARA)
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Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
It is extremely important for both married and single women to think about the future and their finances. This is especially true now that so many women are the breadwinners for their families– the decisions they make matter now more than ever. I’d love it if you did an article about this relatively new trend. Thanks for the good article.