In general, women outlive men, but there’s a downside for elderly women: They are far more likely to be poor than elderly men. Research shows that 13 percent of women past age 75 are living in poverty compared to 6 percent of men. Why?
Well, according to the Women’s Institute for a Secure Retirement (WISER), the five top retirement challenges women face are:
1. Three out of five working women earn less than $30,000 per year.
2. Three out of four working women earn less than $40,000 per year.
3. Half of all women work in traditionally female, relatively low-paying jobs without pensions.
4. Women retirees receive only half the average benefits that men receive.
5. Women’s earnings average $.77 for every $1 earned by men, a lifetime loss of over $300,000.
With these five things stacked against them, what can women do to counteract this and live a long, financially secure life with or without a husband at 98…or even 48? Every successful venture begins with a plan, and it’s never too early to begin. Start by deciding on your short term and long-term financial goals, and then plan accordingly.
Most short-term financial goals can be achieved through the use of special-purpose savings accounts. It’s a good idea to designate several special savings accounts, one for each short-term goal. For example, in the case of planning for a vacation, do the research, and then come up with a target vacation savings amount. If the vacation you choose will cost $2,000 and you want to begin the vacation in 10 months, you’ll need to save an extra $200 per month or $50 per week. Is that doable? If not, you may need to give yourself more time before you take your vacation. While funding your special-purpose savings accounts, you also need to make sure you are holding back enough money for emergency savings. Ultimately, if you keep track of your income and spending every month, and know what amount of savings is possible, then you can construct a plan, follow your course, and reach your goals.
Generally, the two most important long-term goals are saving for the children’s college education, and having enough money for a comfortable retirement fund. The best way to achieve these goals is to take advantage of tax-deferred savings vehicles like a 529 college savings plan or traditional 401k fund.
With regards to financing a child’s education, there are many ways your children can take over some or all of that financial responsibility. They can apply for grants and student loans, do work-study programs, or enroll in an affordable community college for the first two years, then transfer to a four-year college to get their undergraduate degree.
Saving for retirement, on the other hand, is your responsibility, so it should be a top priority. If you are in your 30’s, 40’s or even 50’s, your primary financial concern should be putting money into a retirement account every year for the tax advantages and the compounding value.
You may have a husband who will be sharing the financial burden with you, but you still need to be prepared if things change. Whether you divorce or outlive him, you have to plan accordingly and the best time to do that is when he’s still around!
Financial survival counselor Hollis Colquhoun is an expert in “financial self-defense” for women and author of the new book, Women Empowering Themselves: A Financial Survival Guide. Hollis wrote the concise, pocket-book manual to help women take charge of their finances and overcome money anxiety disorder (M.A.D.). Hollis, who holds black belts in Karate and Taekwondo, combines martial arts principles with over 20 years experience on Wall Street and with her work as a financial counselor to help women of all ages and situations achieve financial security and independence. Contact Hollis at FinancialSurvivalTools.com.