Many female financial advisors have aptly renamed the retirement crisis as a women's crisis. You know why? Because the financial burden of retirement often lands on women.
There's data to prove the gender pay gap, and we tend to take more time out of the workforce to care for our parents and/or children. Plus, we live longer, and typically concede more financially during divorce. We're also biologically designed to worry more than men; we ruminate more and tend to take fewer risks with investments, which can lead to overthinking and lack of action due to fear.
So, it's important to face the music: It's an uphill battle for women to be financially prepared for retirement.
However, just because something's hard doesn't mean we won't do it. Childbirth is hard, and a whole lot of us choose to take it on. Working in corporate America is pretty hard too, as well as balancing working out, eating right, growing your career and making time for those who are important to you. But you already know all of this, so let's get to the point.
How do we make smart choices after acknowledging this uphill battle?
1. Acknowledge Your Feelings: It's OK to feel anxious or other concerns about money. Recognizing your feelings is the first step to managing them. Anxiety isn't logical, but understanding the emotions driving those fears can help you address them.
2. Get Educated: Understand your financial situation. Take a hard look at your income and what it's providing for you. How much are you currently saving? What are the big expenses you're paying for right now, and do you need to have them? Yes, budgeting is the ugly word I'm getting to here. But as soon as you know how much money comes in and out every month, that can help you know how much you can save. Your budget is a lot like your diet—if you're not eating right (or saving the right amount), very little of it matters.
3. Believe in Yourself: This might sound woo-woo, but it's crucial. Many women have a justice-oriented mentality and don't ask for raises if they are making enough to cover their expenses. There's data to support that we're turned down more often and tell ourselves we're unqualified to even ask. However, ask for that raise! Think of it this way, the higher your income, the 15% you're saving into your 401(k) will translate into larger dollars. For example, 15% of $100,000 is $15,000, but 15% of $50,000 is only $7,500. The difference in those annual amounts to your 401(k)/403(b)/457 plan makes a HUGE difference.
4. Take Small Steps: Don't lose hope. Just like balancing work/life and a workout regimen, do the best you can. Small steps make a tremendous difference. Start by understanding your income (step one), then your available retirement plan (step two), and your investments (step three). Tiny steps like increasing your retirement (401(k)/457/403(b)) contributions by 1% each year really add up over time.
5. Find Safe People to Talk About Money With: Let's take the shame out of talking about money. We are supposed to be experts at it but are often told it's rude to discuss it. Most of us are more comfortable talking about our sex lives than our financial ones! Seek out small groups of women who get together to talk about money—find a friend and a financial planner who you feel safe asking all your "dumb" questions to. Astraea Wealth Management offers small groups for women who want to talk about money, if interested, check out this site.
6. Seek Professional Advice: Talk to a professional to get tailored advice. They can help you create a plan that addresses your specific needs and goals.
Keep pushing forward, and know that every small step you take now will make a big difference in the long run.
Written by Laura Corbiani, CFP®, Founder & Lead Financial Planner, Astraea Wealth Management, LLC.
Disclosure: Investment advisory services offered through Equita Financial Network, Inc. an investment adviser with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Equita Financial Network also markets investment advisory services under the name, Astraea Wealth Management LLC. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. Investing in securities involves risks, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.
