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When it comes to preparing financially for the future, women lag considerably behind men. A new GOBankingRates survey found that almost a third of adult women (29%) have yet to start planning for their retirement. Meanwhile, only 17% of men say they don’t have a retirement plan. in today “Financially Savvy Female” column, we chat with Shelly-Ann Eweka, CFP, ChFC, Senior Director of Advisory Strategy at TIAA, why women are more likely to have no retirement plan and what they can do to catch up.
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The financial services industry does not cater enough to women
One of the factors in the lack of retirement planning for women is that financial services companies are not doing enough to educate and cater to this audience.
“Women are typically savers, and the financial services community needs to provide additional guidance and support to women who save to ensure they invest, to ensure they understand what their options are,” said Eweka. “It has to be a personalized and tailored approach when it comes to women, because one size doesn’t really fit all.”
Women especially lack information about the importance of investing when it comes to saving for retirement, Eweka said. This matches the results of the GOBankingRates survey, which found that more than half of women (51%) believe they need more investment education.
“When we think about empowering women to learn and implement appropriate investment of their money for retirement, we need to help them understand what their options are, whether through their employer or of an establishment [retirement savings accounts] by themselves,” Eweka said.
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Women have lower disposable income than men
Beyond the issue of financial literacy, there is also a real financial issue – women simply don’t have as much money as men to put away for retirement.
“It makes sense that women have less retirement savings than men because traditionally women have been paid less than men,” Eweka said. “It’s 82 cents on the dollar for everything women – Black women earn 63 cents on the dollar and Latina women earn 53 cents. These statistics are staggering.
In addition to being paid less, women are also more likely to lose income due to their caregiving responsibilities.
” Since [start of the] pandemic in 2020, almost 2 million women left the labor market,” Eweka said. “A lot of that was because they had to care for children or elderly parents. Much of their lost income and savings are never recovered when they have to go through these types of situations.
Many women struggle to make ends meet. A separate survey by TIAA found that 29% of women struggle to pay their monthly bills, compared to 19% of men.
“You don’t have a retirement account if you’re struggling to pay your monthly bills,” Eweka said. “It’s a direct correlation. If you can’t meet your monthly bills, saving for retirement is a luxury.
How women can start planning for their retirement
Eweka recommends meeting with a financial planner or advisor as the first step in planning for retirement — and it may be more accessible than many women realize.
“If you have a workplace retirement plan, you can go to the company that manages your retirement plan and more often than not those companies provide add-on services,” Eweka said. “They’ve hired financial advisors and financial planners to help you, the client, get set up, help you understand what your goals are, and walk you through the process so you know what you’re working towards.” [They’ll also] make sure you are saving enough to meet this goal and that [your funds are] invested properly.
If you don’t have access to a financial advisor through your employee retirement plan, Eweka recommends that you seek out one of the free retirement planning tools available online.
Once your accounts are set up, the easiest way to save for retirement is to automate your contributions.
“Set up automatic contributions to your retirement account, whether it’s a 401(k), 403(b), or IRA,” Eweka said. “Set up these payments first and so configure your lifestyle based on what’s left and available after that.
Even if you can’t contribute much right now, start small, Eweka said.
“Set aside what you can,” she says. “At a minimum, if you get a game, put that on. If you can afford more than the equivalent, target 10-15% of your income. If you can do more, if you can do the most, do it. Because of compound interest, investing just a small amount can really help you have a good retirement income.
GOBankingRates wants to empower women to take control of their finances. According to the latest statistics, women hold $72 billion in private wealth – but fewer women than men consider themselves to be in “good” or “excellent” financial shape. Women are less likely to invest and are more likely to have debt, and women are still paid less than men overall. Our “Financially Savvy Female” column will explore the reasons for these inequalities and provide solutions to change them. We believe financial equality starts with financial literacy, which is why we provide tools and guidance for women, by women, to take control of their money and help them live richer lives.
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Methodology: GOBankingRates surveyed 1,012 Americans ages 18 and older across the country between March 8 and March 9, 2022, asking sixteen different questions: (1) Do you consider yourself financially literate? ; (2) Where did you acquire most of your financial literacy? ; (3) What financial topic do you think you should have learned more about in high school? (Select all that relate to it); (4) What financial topic do you still think you need more education on in 2022? (Select all that relate to it); (5) When you were growing up, did your parents talk to you about how to manage your money? ; (6) Do you think high schools lack financial education? ; (7) How much has the lack of financial education cost you the most? ; (8) At what age did you become comfortable with basic financial skills (i.e. writing a cheque, balancing accounts, budgeting)? ; (9) At what age did you start saving and planning for your retirement? ; (10) What do you think about how you used your 2021 US bailout stimulus check? ; (11) What financial topic did you feel the need to learn more about due to the COVID-19 pandemic? (Select all that relate to it); (12) What don’t you understand about the Child Tax Credit? (Select all that relate to it); (13) What part of the home buying process is the most confusing for you? ; (14) What part of the car buying process is the most confusing for you? ; (15) Are you ready for the student loan moratorium to end in May? ; and (16) How are your driving habits changing with rising gas prices? GOBankingRates used PureSpectrum’s survey platform to conduct the survey.