For Women Savers, Take These Five Steps to Ensure You Won’t Run Out of Cash in Retirement
A recent study from Merrill Lynch, notes that women have come a long way as household financial stewards in the last few decades.
That said, too many women say they’re not confident they’ll have enough money to live on in their golden years, despite the fact that they live, on average, longer than men.
“Longevity needs to be a factor in everyone’s financial strategy, but more so for women, who on average, live five years longer than men,” Merrill Lynch reports. “Eighty-one percent of centenarians are women. Yet while 64 percent of women say they would like to live to 100, few feel financially prepared, with 44 percent of women stating they worry they will run out of money by age 80.”
Marissa Sanders, a personal finance coach and founder of the website SimpleMoneyMom.com, says that the reality of outliving one’s money is a nightmare all too many women encounter.
“In 2019, I was personally behind on my retirement goals,” she says. “At the time, I had just $35,000 saved for retirement. As a 30-year-old woman, I should have at least $65,000 if I’m going by the general rule of having one-years’ worth of income by age
Sanders says she “never knew” how to grow retirement outside of contributing to a 401(k) until she became debt-free.
“Initially, I made a plan to save $2 million by retirement but soon realized that after inflation and anticipated medical expenses in retirement, I would run out of money soon after 75 years of age. Actually, my number should be closer to $4 million dollars using a simple retirement calculator.”
To get herself back on track, Sanders says she’s doing five things to catch up and get ahead. She suggests that all women interested in having enough money in retirement to take the same steps, which are as follows:
Increase Your Savings Goal 50%. Save as much as you can by living far below your means. “Learn from frugal living experts and cut down on as many expenses you can,” Sanders says. “If you can live on only half of your income, that is a great start.”
Find a Fiduciary to Handle the Details of Your Investments. “A fiduciary has your best interest in mind and won't sell you on financial products just to make a commission,” she advises.
Educate Yourself on Investment Strategies in the Stock Market. The more you educate yourself on investing, the better decisions you will make. “There are many free resources to learn from such as investment courses from financial services companies like Fidelity and Vanguard,” she says.
Become Debt Free. Debt is a burden and is preventing you from making money on your money. “Get rid of the debt so that you can start saving at a furious pace,” Sanders says.
Figure Out How to Make Passive Income. At some point, you might run into maximum retirement savings contribution limits. “But, if you can find
a way to make money without working, then you’ve found the jackpot that all other multimillionaires have found - figure out how to make your money work for you,” she says.
The takeaway here? Adhere to the steps Sanders listed above and hit the gas pedal.
“By taking these five action steps, rest assured that you’ll be set for retirement and ahead of the rest of your peers,” Sanders adds.