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Retirement Planning for Women: 6 Crucial Tips to Take the Financial Reins

Retirement planning for women looks different than it does for men. It accounts for several factors that affect women more. These may include career years lost to becoming a stay-at-home mother or the additional years women live.

Read this article to find out how you can take control of your financial wealth and plan a successful retirement.

Is Retirement Planning for Women Different?

Yes, retirement planning differs for men and women. Several factors contribute to why this happens. The major one relies on their lifespan.

On average, women are known to live longer than men. People aged 65 and above 57% are women, and by the age of 85, 67% are women. Moreover, in the USA, the average lifespan of a woman is five years longer than men!

However, lifespan is not the only reason behind women’s retirement planning. They are often seen prioritizing attributes like family, real estate, debt, and not outliving their their retirement savings.

Another reason why retirement planning for women tends to be different than it is the age-old pay gap. Women in the workforce undergo major challenges, and one of the most prominent ones is pay disparity. The pay gap occurs due to several reasons. Many women have to leave the workforce early to raise kids and many years can pass before they re-enter the workforce. Although it is getting better in many places there still is a difference in pay scales for doing the same work.

Since retirement planning is different for you compared to men, how can you take control of your finances? Read on to find out.

Women Taking Control of Their Retirement Planning

Taking charge of your monetary needs may seem daunting, but you can take control with confidence through proper financial knowledge and a solid retirement plan. Look at these valuable tips to help you get started with your retirement plans.

  1. Be Financially Knowledgeable
    According to a 2021 study, people with higher financial literacy display increased financial wealth. They are known to participate actively in the stock market, prove to have a better provision for their retirement, and have lesser economic anxiety. This data exhibits the importance of financial knowledge and how it enables you to navigate the complexities of modern financial life.

    It is evident that the core of financial literacy lies in your ability to manage your money in a way that benefits you.

    Historically speaking, the financial domain has been dominated by men and is perceived to be more man-driven, even though women are increasingly becoming a larger part of the finance sector. It is high time for women to take the reins of their finances. Start equipping yourself with financial knowledge through books, podcasts, and financial experts.

  2. Use Labor Shortage to Your Advantage
    During the height of the pandemic, businesses started shutting down, and more than 30 million U.S. workers were unemployed. As the economy started getting back on track, job openings increased. It resulted in employers adding up to 3.8 million job listings in 2021. By the time this happened, 2.2 million Americans had already left the labor force.

    Since there is a gap between the vacancy of jobs and difficulty finding labor to fill those posts, employers struggle to get employees for their vacant job roles. This is the perfect opportunity to re-enter the workplace and enhance your cash flow.

    If you are already employed, you can still take advantage of this and perhaps land yourself a better part time job!

  3. Set Up a Retirement Account
    Opening a retirement account does not depend on your marital status. You can open one at any stage of your earning life.

    Typically, workplaces have an employer-sponsored retirement program like the 401(k) plan. If you are self-employed or your employer does not have a retirement plan, you are free to open a Roth, Traditional ir /SEP IRA

    Married couples can open spousal IRAs to save for their retirement. This is beneficial for couples where one spouse earns less or has no income. Here the working spouse contributes to the IRA for themselves and their spouse.

  4. Decrease Your Spending
    Facing cash flow issues in retirement is common. You need to identify ways in which you can trim costs.

    Begin by canceling services you do not use anymore. If there are services you use, shop around. Today, you can get several deals and discounts to save you from additional costs on everything! Prioritize what you use and reduce expenses by eliminating extra costs.

  5. Make Use of Passive Income and Self-Employment
    Passive income and self-employment are the two best ways to boost your retirement savings. Moreover, they give you complete control over your finances and schedule.

    The entire idea behind passive income lies in doing the front end’s work (saving money) and and then take advantage of the benefits with no extra effort. Some examples of passive income include: money from rental properties, sales from an online course, e-books, stock photos, and digital files, dividend stocks, or cashback from rewards.

    Apart from passive income, you can make use of self-employment. It does not necessarily mean owning a business. Self-employment ranges anywhere from side hustle to a hobby you plan on monetizing. Here, you can decide how much effort and time you will put into the work and take advantage of tax deductions not generally available to “employees”.

  6. Keep Going Strong
    Sometimes the best decision you can make is to stay on the course. The stock market is quite volatilve, and you may have the urge to get out of it. But if you bury your head in the sand with patience, you can mitigage losses – one important lesson learned during the COVID-19 pandemic and the Great Recession of 2008 and 2009. The people who stuck to their financial plan during the entire course of uncertainty were able to recover from their losses.

    Retirement can last for more than 20 years or more, and inflation will always be there. Simple 3% inflation over 20 years would slice 60% of your buying power. Women are more at risk due to their longevity. Inflation is the silent but most unprepared for burden in retirement planning.

Retirement Regrets Women Should Avoid

It is easy to look back on the past and regret your decisions or think about ways you could have improved them. So, if you have these common retirement regrets, look at how you can avoid them.

  1. Not Being Involved With Your Spouse in Retirement Planning: Many women let their partners take control of finances. To avoid this, involve yourself in your retirement planning.
  2. Not Asking Questions to Professionals: Working with professionals always helps you gain the upper hand in forming financial decisions. Moreover, when you speak to field experts, do not hesitate to ask questions!
  3. Not Saving Until the Debt is Paid Off: Paying your debt on time is essential, but pausing your savings process for it is not practical. A professional can help you maintain the balance between debt payments and retirement savings. Try to pay down “bad debt” (credid cards), negotiate “good debt” (home mortgage) and use

Bottom Line

The first step to great retirement planning and financial health control is understanding your unique challenges. Take a step forward and become financially literate (this can’t be stressed enough, learn to negotiate, and stay strong in the workforce!