While public speaking and spiders might top the charts of most common human fears, a new concern is rising. Nearly half of the woman in the United States fear going broke at some point during their retirement years. While some might brush the fear off as irrational or bad planning, a recent study by Merrill Lynch shows that their concerns are real.
More Women Than Ever
Previously, budgeting and financing haven’t necessarily been a concern for women. However, since the ‘70s, the demographics have shifted considerably. Since then, women have become far more independent; for instance, women couldn’t get a credit card themselves until 1974! Furthermore, the wage gap has closed from 5% in the ‘70s to 80% in 2018. While there’s still room for improvement, more women are preparing for their retirement than ever before.
So, what are the problems facing women working towards a retirement fund?
Going Broke In Retirement Is A Reality
A recent study by Merrill Lynch proved that women’s fears of going broke in retirement are entirely based in reality. There are many reasons why women, more than men, should fear a lack of funds after they stop working. However, Merrill Lynch pointed out some of the major ones:
First, women, on average, outlive men by around five years, meaning they have to save up more money for retirement. They need to start saving earlier, put away more, or both, which can be difficult to impossible, depending on the woman’s retirement plan.
The second most significant factor is that women seem to underestimate how much they need in retirement. For example, the study showed that only 9% of women have $300,000 or more saved up, the number currently viewed as the minimum needed for a successful retirement. In fact, most experts recommend that women save at least $700,000 for retirement!
How Can Women Avoid This Fate?
In case you’re part of the more than 125 million women worried about going broke in retirement, we have some helpful tips for you! There are still ways to catch up, no matter where you are, raising your chances at a great retirement:
- Start Planning – Now! Sure, it can be daunting to start planning for retirement, especially for women who have never saved before. There are tons of ways to educate yourself: read articles on the web, listen to popular finical podcasts, and talk with friends, family, and your financial advisor. The point is: it’s never too early to start planning.
- Set-Up Your Retirement Account Immediately. Many workers, both men and women, dilly-dally when setting up their retirement account at work. They think they have all the time in the world. Worse still, some women even expect to rely on their spouse’s retirement fund! This is a horrible idea, because they have no access to or management of the funds. Don’t wait, set up an independent retirement fund for yourself.
- Save Smartly. From time to time, everyone receives some unexpected money. Whether it’s a tax refund or a birthday, extra cash is always night. However, instead of spending it, why not put it in a retirement fund that gives you a little something for keeping your money in there until you stop working? Of course, experts also recommend you put a portion of every paycheck into your retirement fund. However, if you followed the tip above, that’s already done!
So, going broke in retirement is a real problem for women. However, with some smart planning, you can keep yourself afloat and satisfied. Most importantly, don’t forget to talk to your financial advisor before you make any changes to your retirement plan.
Sources: Finance101, The Motley Fool.