All working Americans, regardless of their gender, need to save for a comfortable retirement. But one often overlooked aspect is the fact that the need is stronger for women. Women are more likely to outlive males. They’ve got a higher possibility of requiring paid care sometimes, as their spouse may not be around to provide such.
It isn’t reassuring to learn that women only save about half as much as men for retirement. A recent study from Student Loan Hero found that women averaged $45,614 for retirement compared to men at $90,189. The gap is huge and can be a severe disadvantage for most women later in the future.
Why Are Women Saving Less?
When asked why they are struggling to save up for retirement, most women cited having to live from paycheck to paycheck and paying back student loans as their greatest drawback. And so did men. So why are women saving only half of what men are saving?
For one thing, details from the study show that women are more likely to own up to their lack of understanding of investment and retirement planning. Women are also most likely to take a break from their careers to act as caregivers, reducing their retirement saving ability.
Finally, there appears to be a large wage gap between women and their male counterparts, with women earning significantly lower than men across the board. So, it’s easy to see why they might not keep up with men when it comes to retirement savings.
As a lady, if you plan to retire comfortably (who doesn’t), then you need to get a handle on your savings early on in your career. Don’t worry if you’re behind. Below are some tactics you can adapt to catch up.
How To Boost Your Retirement Savings
One of the best ways to ramp up retirement savings is to look through your budget and cut down unnecessary or avoidable expenses. This could mean giving up a car if it’s not needed, downsizing your living space, cutting down on leisure, and more. The more cash you’re able to free up at the end of each month, the more money you’ll have to save.
If you have a 401(k), ensure to contribute enough funds to get the matching dollars your employer is willing to give. This way, you’ll have additional funds saved up to grow your account.
Speaking of growth, you may need to change your investment strategy, especially if it’s sluggish. Instead of bonds and other safer investments, consider investing in stocks. While stocks come with some degree of risk, it offers an excellent way to score up returns to your savings and can be instrumental in helping you catch up with your retirement goals.
For instance, saving $300 monthly for the next 25 years will provide you with an additional $228,000 in retirement savings if your investment generates an annual return of 7% within the period.
If you want to play it safe, you can swing an annual return of 4% and still end up with $150,000.
In a separate study by Merrill Lynch and Age Wave, most women say one of their greatest financial regrets was not saving more. So, this should be a reason to be a little braver about your investment.
Finally, it’s important not to hesitate to ask for a raise during your career if you feel like you deserve one. The more money you earn, the more you can save for retirement. There are tools like Glassdoor’s “know your worth” that can help you compare your salary to other people in the same position and experience.
If you discover that you earn less than your male counterparts or other people in the same role, you can build a case for getting a raise. Also, consider working out other side hustles to ramp up your monthly income.
