Women & Retirement

Last updated: 9/10/2009 3:03:14 PM

Take Action In Each Stage of Your Career

Early Career

Find a mentor. Whether it's a trusted friend or coworker, finding a mentor who can help answer your financial questions and give you savings advice is key to starting your career on the right financial foot.
Start saving. Even if $20 a paycheck is all you can start with, it's something! It's OK to start low, as long as you start.
Give yourself raises. Work toward contributing the maximum allowed in your retirement accounts. When you get a raise, give your savings a boost as well.

Mid Career

Be a mentor. Help those new to retirement saving by encouraging them to save and answer questions they may have.
Retirement over tuition. Helping your children with college costs is wonderful, but your retirement savings should come first. One-third of those with college bound children put their retirement savings ahead of their offspring's college funds. Why? There are other ways to financial college (loans, financial aid, grants…).
Evaluate and rebalance. As you move into different stages of your life, your circumstances change and so may your investment needs. This may be a good time to shift your investments around, rebalance your portfolio, or adjust the risk level of your investments.

Late Career

Continue mentoring. Share your experience and knowledge with those just getting started. It could change someone's life.
Sit down with someone. It's time to take a serious look at your financial situation to see if you're on track to retire at your target age. If you are within 10 years of retirement and have questions like, when can I retire or will I have enough money in retirement, consider the Retirement Income Analysis offered by WEA Trust Member Benefits.
Extra contributions. Take advantage of opportunities to catch-up on retirement savings. If you are age 50 or older or if you have 15 or more years of service with the same employer, you are eligible to beef up your retirement savings with catch-up contributions.
Saving opportunities now that kids are gone. Now that the kids are on their own, do you have any extra money each month? Consider socking this extra cash away each month. Remember, every little bit helps with you're looking to retire within the next few years.

Why women are falling short

"Don't wait to save for retirement! Take control of your future. Find a financial mentor who can walk and talk you through the process."
—Mary Jo Hannemann
Appleton Area School District

When it comes to retirement planning, people often underestimate the importance of saving early. It wasn't until later in Hannemann's career that she began paying serious attention to her retirement savings plan.

"I never gave retirement much thought until I entered my 40s. It wasn't until then that I began attending retirement saving seminars offered through my school district."

Wanting more personal planning advice, Hannemann decided to seek out the help of a financial advisor. She found it difficult to find a financial advisor who could speak specifics of retirement savings for Wisconsin educators.

"I needed a clear, easy-to-follow plan for retirement. The private sector didn't seem to understand benefits specific to Wisconsin public school employees, such as Wisconsin Retirement System, our state pension plan."

Hannemann eventually found the Retirement Income Analysis program offered through WEA Trust Member Benefits. She completed her Analysis in January 2008.

More women are seeking out such retirement financial analysis, for good reason. They can't afford to retire. Even though they may have a traditional pension or a retirement plan, such as a 403(b) tax-sheltered annuity or IRA, women consistently enter retirement with about half as much money as men.

The fact is, a comfortable retirement is a breathtakingly expensive endeavor. Financial planners suggest that one should shoot for an annual retirement income that's roughly 85% of your preretirement income, depending on your continued fixed expenses into retirement. Translation? Everyone needs to save—a lot. But women, who tend to live on average five years longer than men, should actually be saving more.

"Women are at a much higher risk of facing financial uncertainty in retirement and, on average, will enter retirement with considerably less savings than men," says Michelle Slawny, a CERTIFIED FINANCIAL PLANNER™ and Senior Retirement Income Consultant at WEA Trust Member Benefits. "Women face unique challenges because they generally spend fewer years in the workforce, earn less income, gravitate toward conservative investments, and have longer life spans than men."

According to the U.S. Census Bureau, women earn about a third less than men during their working lives. This can translate into smaller contributions to Social Security, pensions, and other retirement accounts.

"It's extremely important that women start saving for retirement early on in their careers. Contributing to a 403(b) or IRA the first year in their career can have a significant impact on their retirement savings just 10 years down the line," notes Slawny.

Women also gravitate toward more conservative investments. Such a strategy usually means lower earnings over the long run. "If you choose a conservative approach, you may need to invest more money to meet your goals. But if there's a time to be more aggressive, it's when you're young. The potential for higher returns is accompanied by greater risk, but if you have a long investment timeline, you are in a better position to take the risk and recover from market fluctuations," explains Slawny.

Women are also more likely than men to drop out of their careers temporarily to take care of children and aging parents, further cutting into their earnings and pension accumulation. However, Slawny notes that this shouldn't discourage women from taking time out of their careers.

"The key is to start saving early. The earlier you start saving and the more you contribute, the more time you can comfortably take off from your career," says Slawny.

Investment advisory services offered through WEA Financial Advisors, Inc.

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