Most Americans are not faring well when it comes to retirement savings. Roughly 66% of working households miss conservative retirement savings targets for their age and income, according to the National Institute on Retirement Security. And when taking a closer view of the retirement outlook for women, the situation doesn’t look rosy.
A recent study conducted by Transamerica Center for Retirement Studies analyzed the retirement prospects among women in the United States. The results show that many women are not ready for what lies ahead. About 54% of the 2,172 women surveyed say they plan to retire after the age 65 or not at all. What is even more troubling is that 64% of female baby boomers say they have no backup plan in the event they are forced to retire early.
The Cheat Sheet spoke with Catherine Collinson, president of the Transamerica Institute and Transamerica Center for Retirement Studies, to learn more about why women are trailing when it comes to saving for their golden years.
Collison notes that even though women today have more education and better career opportunities, they often face unique situations, such as lower pay and time away from work to care for young children. These factors tend to reduce income potential.
“Women continue to face challenges that make it more difficult to save for retirement compared to men. We’re more likely to work part-time or take time out of the workforce to be parents and caregivers. The gender pay gap is closing but it’s not yet fully closed,” said Collinson.
The fact that many women are not up to speed with retirement savings is even more troubling considering the fact that women tend to live longer. According to the Social Security Administration, on average, a man who turns 65 today can expect to live until age 84.3, while a woman who turns 65 today can expect to live until age 86.6.
The administration notes that these numbers are just averages, and that the overall population is living a lot longer. About one out of every four 65 year olds will live past the age of 90, and one out of 10 will live beyond the ripe old age of 95.
Here are some ways to get back on track with your retirement.
Hire professional help
The Transamerica study revealed that just 36% of women use a professional financial adviser. Most of the women in that group (77%) use an adviser for retirement investing recommendations. If you need help with developing a financial plan, you can start by seeking the services of a certified financial planner. The Certified Financial Planner Board of Standards website has an online directory where you can search for a planner by state or ZIP code.
Know your retirement number
Learn how much money you’ll need to save for retirement and work toward this goal. Don’t just guess randomly and hope for the best. Unfortunately, this is what many women are doing. The Transamerica study found that 57% of women guessed their retirement savings needs. There are plenty of online retirement calculators that can assist you with discovering how much money is appropriate.
Ask for assistance with caregiving
Don’t let the entire burden of caring for an aging parent fall on your shoulders. If you have siblings, ask them to step up and share the load. Delegate the financial and caregiving responsibilities so that you can work and preserve some of your cash flow. Also seek help from your local department of aging, which can offer assistance with seeking benefits, locating a support group, and more. You can find your local agency when you visit the Eldercare Locator website.
Also ask for help with caring for young children. Don’t sacrifice your own well-being and future financial security. “Within the family, women and men should strive to share more of the parenting and caregiving responsibilities so that the required time and cost do not disproportionately fall on women,” says Collinson.
Only you can steer your finances in the right direction. The key to recovering your retirement is to take ownership. “As women, we need to take greater levels of personal responsibility for saving, investing, and securing our financial futures,” said Collinson.