BPW Foundation's Women Misbehavin' Blog

Well behaved women never make history

Saving for the Future

Posted by egehl on March 15, 2010

Ok I will admit it, I don’t save enough for a comfortable retirement.  And I know I am not alone with this confession.  I give the bare minimum to my 401k account but without a raise in over two years, and more bills than I know what to do with, it’s hard to squeeze out those extra dollars. Nevertheless I know that saving for my retirement is important especially because I am a woman.

One of the many repercussions of the financial crisis is how hard the downturn has hit our savings accounts, hampered our ability to donate to a 401k and caused many people to stop saving altogether.  Many Americans have had to endure remaining stagnant financially because their organizations cannot afford to offer a raise, opportunities to move up and make more money do not exist, and leaving for a higher paying position is impossible because of a non-existent job market.

Women face many unique challenges when it comes to saving for retirement and these contribute to why poor, elderly women are a growing segment of our population.

Because women live longer, they often outlive their savings and depend more on a Social Security check, which barely covers today’s living expenses. With a longer life expectancy, women have to think about extended health care and long-term care costs which are steadily increasing. Two-thirds of all working women earn less than $30,000 a year in jobs without pensions. The chronic wage gap exasperates this as women’s overall lifetime earnings are less therefore they cannot afford to put away significant savings.

Many women will experience interruptions in their earnings if they decide to stay home to raise their children. Over a lifetime, women will spend 27 years in the workforce, while men will spend almost 40 years. This time out of the labor force means they will receive about half the pension benefits as retired men, and a smaller Social Security check.

When it comes to investing for the future, women typically have less certainty about their decisions than men.  Personally, I have never felt knowledgeable or confident about making investment decisions.  And according to a recent survey, I am not alone.

There was an online survey of more than 1,000 of MassMutual’s retirement plan participants that indicated that while women were just as optimistic as men in regards to the market outlook, women were notably less confident in making their own investment decisions, compared to men. 

Overall more men enjoy managing their investments than do women. Women tend to shirk away from managing their accounts so much so that 39.3% of women prefer to spend as little time as possible on investment decisions, compared to 28% of men.  I can attest to that. Personally if I had my druthers I would never have to think about financial management. It’s not how my brain works and frankly I have little interest to learn and navigate a very complicated system that seems like another world to me. However I know it’s important and something I need to care about for my future well-being.  

Now that women represent half the workforce, and many of them are their family’s sole bread winners, it’s critical that women become more comfortable with their financial decisions and understand how their choices impact their future. However it’s hard. How do you plan for 30 years down the road when you’d be happy to just pay today’s bills?

There are ways to educate yourself about making wise choices. If you cannot afford to hire a financial advisor, take advantage of the many books and resources out there designed specifically for women. A central place for valuable information is the nonprofit, Women’s Institute for a Secure Retirement (WISER).

If your workplace has a 401k plan take advantage of it even if you can only donate a small percentage. Saving a little bit adds up over time and utilize your 401k plan advisors for guidance on how to invest your money. If you want to get even more involved, women have started investment clubs nationwide and a simple Google search can help you locate what’s in your area.

The bottom line is whether we like it or not women have to take charge of their financial future. And if we want to have the life we are enjoying now when we are older that is going to require significant savings. It’s never too late to start saving and give yourself realistic goals. You will be surprised how even a small nest egg can grow.


One Response to “Saving for the Future”

  1. gansie said

    i was actually just looking into IRAs this weekend. Thanks for the reminder to keep on searching. Need to figure something out by April 15th.

    i’m open to suggestions…

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