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Editor’s Note: This story was originally Penny Horder.
Ladies, you already know life isn’t fair. Retirement savings are no different, and new evidence has emerged.
When it comes to how men and women save for old age, New study by retirement giant Vanguard We found two conflicting trends.
- Women are more conscientious about participating in their employer’s 401(k) plans. There are fewer male participants than females unless there is automatic enrollment. The biggest difference is that 81% of women with incomes between her $50,000 and her $75,000 workers have 401(k) accounts, compared to 67% of men. It’s just
- But strangely, men tend to save more for retirement than women. The average man has $93,500 in his 401(k) account and the woman has $70,000 in her.
how is that? That’s because men tend to make more money, and men take more in their retirement salaries than women.
So how can women close the retirement savings gap? Here are seven strategies to follow.
what women are against
Like we said, life isn’t fair. Here are three reasons why women’s retirement savings tend to lag behind men’s.
- Working women are more likely than men to take a break from their careers to care for family members According to the U.S. Department of LaborThey may be stuck in a job gap and lose several years of employment that could have contributed towards their retirement.
- According to the Labor Department, women are more likely to take part-time jobs that are not covered by retirement plans.
- There is still a wage gap. A woman earns her 83 cents for every dollar a male full-time worker makes. According to the Bureau of Labor Statistics(There are many contributing factors to this phenomenon, but don’t give just one reason that you’ve never asked for a raise.)
Here are some strategies women can use to increase their retirement savings.
1. Let’s get started, Pronto
If you haven’t saved for retirement, start as soon as possible. The sooner you start, the more your money will grow over time thanks to the magic of compound interest.
If you’re saving (good for you!), take a few minutes check your progressAre you saving enough for your anticipated needs?
2. Save an amount comparable to your company
Financial advisors recommend that you save at least enough for your 401(k) to fully match the employer offered. Otherwise, you’re basically giving away free money.
One of the best things about 401(k) plans is that many employers will match your contributions to some extent. This is part of the compensation package.
Suppose your employer offers to match 100% of your 401(k) contributions up to 6% of your income. If you make $50,000 a year and make the most of matching with your employer, and you put in her $3,000, your employer can add another $3,000, doubling her savings. can.
3. Try to save more
Once that’s done, see if you can beat your employer’s match. Many people do.
The average company match rate is 4.5%. According to Vanguard’s annual investment behavior report,.
What percentage of salary does the average person put in a 401(k)? 7.5% for men, 7% for women, According to Vanguard’s new 2.5 million retirees survey.
If you’re reading this and suddenly find yourself contributing below average amounts to your retirement plan, you should strongly consider stepping it up a notch if possible.
4. What if I don’t have a 401(k) plan?
If you don’t have access to a 401(k) plan at work, there are ways to save for your own retirement.
There are also investment apps that offer stocks to get you started for free. For example, Robinhood gives you anywhere from $5 to $200 worth of stock for free just by downloading the free app and funding your account.
5. Don’t overspend on retirement
Experts strongly recommend not using up your retirement savings before you retire. You will pay significant financial penalties, which can seriously affect your retirement plans.
6. Be prepared to work as long as possible
Another strategy for women: Prepare for the possibility of not retiring until well over 65.
Maintain the ability to continue working after age 65. Keep your job skills up to date or learn new skills. Many employers, community colleges, and nonprofits offer classes on the latest technology and careers.
Taking care of your career will increase your chances of staying comfortable and safe when it’s time to finally retire.
7. If possible, wait to get Social Security
As you approach your 62nd birthday, you face a big decision. At age 62, should you use Social Security and lower your monthly benefits? Or should Social Security be delayed to get more benefits?
The answer to whether getting Social Security at age 62 is the right choice for you depends on several factors, including life expectancy, early retirement, and overall economic conditions. By getting Social Security at her 62 instead of full retirement age, she could cut her monthly benefits by 30% for the rest of her life.
However, if you’re relatively healthy and don’t start claiming Social Security benefits until you’re 70, you’ll end up getting a big check nearly 80% of the time.
Am I entitled to a portion of my spouse’s retirement benefits if I am divorced?
probably. Most private sector retirement plans do this through a court-issued Qualified Domestic Relations Order (QDRO). According to the U.S. Department of LaborYou or your attorney should consult with your spouse’s plan administrator to determine what requirements the order must meet.
Even if you divorced decades ago, you may be able to get Social Security based on your ex-spouse’s benefits rather than your own work history, as long as you haven’t remarried. However, those with a long employment track record are usually eligible for larger benefits based on their own income rather than their spouse’s income. Social Security offers her the greater of the two benefits, but not both.
Regardless of whether you are currently married or divorced, the maximum benefit you can receive based on your spouse’s record is 50% of that spouse. full retirement age advantage. Full retirement age is the age at which he is entitled to 100% of his benefits. I am 66 or 67, depending on when I was born.
These things are important to know.
Life isn’t always fair, so you have to take care of yourself.