According to a June 2020 report from the Transamerica Center for Retirement Studies, only six in 10 women are saving for retirement, which is significantly less than men (78%) 1. Women continue to fall short in their overall retirement savings.
What can they do to fix this issue? Here are 3 tips for women seeking to increase their retirement nest egg:
1) Budget and Be Aware of Spending Habits
Start by coming up with a budget. This is the foundation to financial wellness. It is important because it helps you accurately plan and track how much money you spend, save, and invest.
It is the same as you tracking your weight and food intake when you try to lose weight.
Identify your spending habits and figure out where you are overspending. For many people it is eating out, traveling, or shopping. I tend to overspend in clothing. Where do you tend to overspend?
Figure out how you can reduce those expenses and redirect that money into saving and investing for retirement.
2) Automate your Retirement Savings
Ideally you are saving about 20% or more of your gross income, but just focus on starting to save.
Figure out if your employer offers a retirement plan and if they match your contributions. Most employers match dollar for dollar, up to a certain contribution percentage. If so, contribute up to that amount so that your employer contributes the same percentage as well.
This is free money your employer is giving you. Do not miss out on it! Your employer will automatically deduct your contribution from your paycheck and move it into your retirement plan. If you have not enrolled in company retirement plan, ask your HR rep how to get started.
Your goal should be to ultimately max out the retirement plan contributions each year.
3) Have a Financial Plan
Figure out how much you need to save up to live comfortably in retirement. This will be your roadmap to figure out how much money to save each month between now and retirement.
The best step here is to hire a financial advisor to help you with future projections and assumptions.
You will be surprised how even saving a little can add up over your working years. Let’s start now to have a bright retirement in the future!