The little things you buy from day-to-day may not seem like they have a major impact on your retirement saving efforts. A latte here and there, after-work drinks with coworkers, a gift to yourself from your Amazon wish list. However, all of this adds up. A recent study conducted by SurveyMonkey for the Acorns app found that one out of every three millennials spends more money on coffee than they spend saving for retirement! What’s more, the survey found that this statistic applied to a majority of women. When it comes to women and retirement, the same basic principles apply for anyone building a nest egg.
Barriers for women and retirement
While the same tried and true investing and saving strategies apply across the board, women do face obstacles that are unique to them. For example, there is such a thing called the gender retirement-gap, which is in fact more significant than the more commonly known gender pay-gap. Women on average retire with two-thirds the savings of men, yet women live six to 10 years longer. When considering a longer life span, you must also take into account increased medical costs.
Here’s how to get ahead
Despite the barriers, these are not obstacles that cannot be overcome if you plan smartly. Here are a few pieces of advice to live by when it comes to women and retirement.
- Start early. Your money in your 20s is worth more than your money in your 30s, 40s, etc. In fact, $1 in your 20s is worth about $16 in retirement, while $1 in your 30s is worth about $8 in retirement. That’s because the earlier you save, the more time you have for your money to compound.
- Know the retirement accounts available to you. Some are employer-sponsored, while others are individually obtained. Here are the basics:
- 401(k) or 403(b): Employer-sponsored accounts that often involve an employer matching contribution.
- Traditional IRA: You contribute pre-tax earnings that will not be taxed until you withdraw your money in retirement.
- Roth IRA: You pay taxes on your contributions, but your money will not be taxed when you withdraw it in retirement.
- Solo 401(k), SEP IRA, Simple IRA: Designed for individuals who work for themselves or who own small businesses.
- Invest even small amounts. You do not have to be rich to invest money in places where it can grow. The money you put into your retirement accounts should then be placed in investments that offer you opportunities for growth.
- Consult a professional if you need help. Finances are complex—period. There’s no shame in working with a professional to help get your retirement finances on the right track.
The best advice for women and retirement is to be proactive about your retirement investing. Do not sit back and do nothing just because you feel overwhelmed as to what it is that you should be doing! You will ultimately feel more empowered after taking control.
For more retirement savings tips, continue to follow Ty J. Young Inc.’s Retirement You Earned blog! To learn how you can maximize the amount of income you receive in retirement, call our qualified Ty J. Young Inc. advisors today at 877-912-1919.