“Considering the life expectancy for women is anywhere from three to five years longer than men, it’s important for women to take the long view when it comes to retirement planning. Hard-earned savings will need to last over many years,” said Myra Alport, accredited financial counselor (AFC) and founder of Myra Alport Money Coach.
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While the prospect of outliving your retirement savings may be frightening, feel empowered. With the right strategy and some effort, comfortably financing your golden years is possible — even if they last a long time.
We spoke with several financial planning experts about how women can save more money for this much-anticipated chapter. Here’s what they had to say.
Why Women Need To Save More
Before diving into specific tips, let’s explore why women need to stash more cash away for retirement than their male counterparts. Apart from living longer than men, women still experience a gender pay gap.
“On average, women earn only 81% of what men earn. This can impact women’s savings, Social Security, and pensions,” said Angela Dorsey, certified financial planner (CFP) and founder of Dorsey Wealth Management.
Plus, women tend to take fewer risks when investing than men, said Dorsey. That means their dollars may not grow fast enough for them to reach their retirement savings goal.
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Tips To Boost Your Retirement Nest Egg
A recent GOBankingRates survey revealed that nearly 40% of women don’t have a retirement savings goal. If you fall into this group, it’s time to set a target now!
Set a Savings Goal
Without a specific number in mind, you won’t know how much to invest each month or when you have enough in your account. Start the goal-setting process by envisioning your ideal retirement lifestyle.
Next, price out how much you’ll need to live that way each year (and add a cushion for inflation). Then, you can determine how much you need to save each month based on the amount you’ve already accumulated and when you plan to retire.
Bonus tip: Don’t forget to factor in irregular expenses. For example, during “Years one through three in retirement, [you may spend] more money than originally planned on long-awaited travel, hobbies, entertainment, and relocating closer to family,” said Alport.
Prioritize Savings
Alport recommends making saving a priority while you’re still working. Once your primary income source dries up, it will be harder to put money aside.
You can boost your long-term savings by taking full advantage of any retirement account company match your employer offers. Plus, an automatic one percent annual increase in your contributions can really add up over time without noticeably impacting your day-to-day budget.
Pay Off Debt
Debt payments can eat up a significant chunk of your budget, making it difficult to save for your golden years and stretch your dollars once in retirement.
While any debt can be problematic, it’s especially important for you to “Make a plan to pay off those high-interest credit cards if you carry a balance,” said Alport.
Create a Budget
Alport advised, “Now is the time to track where your money is going each month. You’ll be surprised by the amount of lifestyle creep going on thanks to inflation.”
Once you see where your cash is going, you may find opportunities to scale back your spending. Doing so can help you pay off debt faster, save more money for retirement, and have more financial breathing room after you quit working.
Optimize Your Investment Strategy Through Education
Dorsey said that education is key. When you learn more about how investing works, you’re more likely to take calculated risks and “feel more comfortable investing in equities which provides the growth needed to reach financial goals.”
Create an Income Plan
You need to know where your money will come from during retirement. “Product-wise, women can leverage assets such as tax-efficient investment portfolios, laddered certificates of deposit, guaranteed income annuities, fixed indexed annuities, and a myriad of other choices.
“Understanding how best to access and utilize housing wealth (home equity) is also an important piece of the equation. Additionally, we also believe that it’s critical to engage in detailed planning around making the optimal elections for social security, Medicare, and long-term care,” said Terry Parham, Jr., CFP and co-founder of Innovative Wealth Building.
Consider Semi-Retirement
“One theme I’ve been exploring more and more for women, especially single women, as they prepare for retirement is the idea of a long semi-retirement period,” said Arielle Tucker, CFP and founder of Connected Financial Planning.
“I’ve found this to be a win-win for women to continue to be engaged and participate in work they are passionate about while being able to take the pedal off a full career. This can be particularly beneficial for individuals who may not have accumulated sufficient savings for a traditional retirement or those who enjoy the sense of purpose and engagement from paid work.”
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This article originally appeared on GOBankingRates.com: Financial Planning Experts: 7 Ways Women Can Save More for Extended Retirement Years
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
