Women need to latch on to their purse strings and hold on tightly if they want to have a glass half full rather than half empty when they retire. Historically, women have had less retirement money because women are paid less than men for equal work and are more likely to have had career gaps in order to bear and raise children, or care for elderly family members.
These factors do not give women an excuse not to save for retirement; they should instead be a catalyst to start taking retirement seriously.
Retirement Planning Tips for Women: What You Can Do Right Now
Two Ways to Pay Yourself First
Painlessly pay yourself first is to have a percentage or an specific dollar amount directed from your paycheck directly deposited into 1) a savings vehicle and 2) a retirement account. Start with a specific dollar amount or percentage that does not eat into your monthly budget and increase it when you become more comfortable with the amount or you receive a raise.
Up the Ante
Aim to invest at least 10 percent of your total income into a retirement vehicle.
Think About Tomorrow Before you Spend
You may need to cut back on extra daily expenses including coffee or lunch bought outside the home, or monthly shipping sprees. That new pair of boots may look great this season, but a comfortable retirement will set your mind at ease for years to come.
Max Out Your Company's 401K
If your company has a 401K plan, join it as soon as you are eligible Invest the highest percentage you can while still being able to pay your bills and contribute to an emergency fund. With each raise, up the amount you invest. Ideally you should be contributing at least the percentage your company matches, which could be between 3 and 6 percent.
Take Stock
Start investing in the stock market. Get a book from the library, or start reading up on stock market investing online, using an investment education website that does not directly sell any investment products.
Look for Dividend Companies
When choosing which stocks to invest in, through a brokerage, with a direct stock plan or a direct reinvestment plan, stick with companies offering a dividend. This is extra money is your retirement plan when you have the dividends automatically reinvested into your account.
Open an IRA or Roth IRA
Open an IRA or a Roth IRA in addition to your company-sponsored retirement fund.
Retirement Planning Tips for Women: What to Avoid
Do Not Count Solely on Social Security Benefits
Because you are making less than your male counterpart for the same work at the office, your social security benefits will also be lower. The future of social security is precarious, and should not be seen as the sole source of your retirement funding.
Do Not Count on Your Spouse's Retirement
Your spouse or domestic partner may be socking away good chunks of his paycheck into his company stock, 401K or IRA plan, with the good intentions of sharing a comfortable retirement with you. Divorce is a reality and in the best case scenario you would be entitled to some of that money, through a divorce settlement. However, that would leave you both with at most half of the accrued amount.
Do Not Let Credit Card Debt Add Up
Do you really need that new smart phone, $20 lipstick or designer handbag? It's easy to slap these purchases on a credit card and pay them off over time. When you carry a credit card balance you are eating into money you could have been saving for retirement. Pay down debt each month.
Sources
Personal Experience
401(k) and Divorce, http://www.401k.org/AboutPlans/GeneralInformation/401kandDivorce/tabid/66/Default.aspx
http://www.aflcio.org/issues/jobseconomy/women/equalpay/
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