Women want to retire earlier, but they feel less confident.
Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…
The interesting study
The Transamerica Center for Retirement Studies released an interesting report that compares the retirement strategies of women to men. It compares the genders using 15 different measures – everything from how comfortable each gender feels and what they have planned, to what they’re doing to get their finances ready for retirement.
The big result
The headline result is that women have a significant amount of work to do if they really want to be ready to make their retirement plans happen. While women may want to reach retirement earlier, they’re currently being less aggressive than men to prepare their finances for the realities of retirement. So basically, to make their more ambitious retirement plans happen, they’ll need to work twice as hard.
The fascinating details
Here’s a quick look at all 15 points of comparison used on the report…
- Women are less confident about being capable of a full comfortable retirement.
- For men, 17% of “very confident” and 50% are “somewhat confident”
- Whereas only 14% of women are “very confident” and 46% are “somewhat confident”
- More women want to retire before age 70.
- 60% of men want to retire before age 70 – only 43% by age 65
- 62% of women want to hit retirement before 70 – 47% before age 65
- More women are unsure if they’ll need to work during retirement.
- Only 18% of men are unsure whether they’ll work
- 24% of women are unsure
- Women are less prepared for early or forced retirement.
- While 58% of men don’t have a backup plan, 64% of women don’t either
- Slightly more women are driving retirement themselves.
- 59% of women will rely on retirement accounts and investments to fund their retirement
- Only 57% of men will be fully self-funded – 10% are still relying on company funded pension plans
- Women are slightly more concerned that time off for caregiving will hurt their retirement prep.
- 67% of women worry it will have an impact, versus 63% of men
- Women are more likely to work part-time, which can make it harder to prepare adequately.
- Only 14% of men work part-time, versus 28% of women
- Partially due to No. 7, fewer women have access to employer-based retirement plans.
- 71% of men have access to these programs, but only 66% of women
- However, when employer-based plans are offered, women don’t take advantage as often, either.
- Only 77% of women use offered programs, while 82% of men will use them
- Women also contribute less to employer-based programs
- The median contribution for women is 7%, compared to 10% for men
- Fewer women are saving outside of work, too.
- 64% of men save outside of employer-based plans, while only 55% of women do the same
- Women also think they can live on less.
- The median retirement saving target for men is $1 million
- The median for women is only $800,000
- However, most of those women from No. 12 are just guessing.
- Only about 43% of men leave savings estimates to guesswork, while 57% of women are guessing at what they’ll need
- Women use financial advisors about as often as men.
- 37% of men ask for professional advice
- 36% of women do the same
- Women (and men) want to keep things simple.
- 53% of women believe easy-to-understand resources and education materials would help them get motivated to save
- 47% of men believe the same thing
What you can do
“As a whole, women need to get real and get working when it comes to retirement,” says April Lewis-Parks, Director of Community and Public Relations at Consolidated Credit. “If women want to reach retirement earlier and they’re starting out already behind, then they’ll need to be proactive and aggressive about creating an effective retirement saving strategy. That’s the only way to make your plans into reality.”
The following tips can help you do just that (and apply regardless of your gender):
- Talk to a financial advisor. Guesswork is the enemy of good strategy, so if you really want to be prepared and you’re not sure how to do that on your own, then you need to talk to a professional.
- Take advantage of employer-based plans. There’s no good reason to ignore retirement plans like a 401(k) if your employer offers them to you – especially if they’re offering free money through a match program to incentivize you to contribute.
- Get an Individual Retirement Account. Whether you’re offered an employer-based plan or not, you need to get an IRA open to diversify your retirement assets.
- Part-timers still need to contribute. Often part-time workers negotiate hours to give them the money they need now without thinking about the future. However, part-time workers should still set money aside for retirement every month, so factor that added cost into your strategy of how many hours you need at work.
- Find free resources that work for your comprehension level. One of the biggest roadblocks to retirement is often intimidation because materials can be complicated. If you don’t understand a particular resource, find beginner or introductory education materials on retirement and investing so you can start to build your knowledge base.
- Contribute every month and make it automatic, if possible. You can set up automatic 401(k) contributions that deduct out of your paycheck before taxes are taken out. You can also set up recurring contributions on an IRA so the money always gets moved.
- Avoid early withdrawals. Withdrawing money from a retirement account to pay off credit card debt or handle bills you can’t cover in your budget hurts your financial future and only delays the inevitable in the here and now if you’re struggling. You will also face penalties and possibly even extra taxes to pay for the year, depending on the account.
- Transfer your 401(k) if you leave a job. When you leave a company, you can cash out your 401(k) or your can move that balance into an IRA. The second option is the best for your retirement; otherwise, you’ll start back at Square One.
If you have questions or need help to eliminate debt so you have something leftover each month to put towards retirement, we can help. Call Consolidated Credit today at 1-888-294-3130 or take the first step by completing our online application.