Saving for retirement is important and it’s something you should
start doing at a young age so you can enjoy your golden years.
Knowing this, it’s surprising how few women are prepared for
retirement. Many women do not have the same knowledge and
expectations as men do when it comes to their finances. There are
many reasons why.
By Eric Heckman
Saving for retirement is important and it’s something you should start doing at a young age so you can enjoy your golden years. Knowing this, it’s surprising how few women are prepared for retirement. Many women do not have the same knowledge and expectations as men do when it comes to their finances. There are many reasons why.
The following are five common financial myths along with effective strategies to help women take control of their finances.
No. 1: The Fairytale Princess Syndrome. This is the idea that your knight in shining armor will be the answer to all your financial needs. It doesn’t matter whether a woman is married, divorced, widowed, or single; some still think they don’t need to know about finances because a man will take care of them.
The flaw in this thinking? First off, according to the National Center for Health Statistics, half of all marriages end in divorce, and this percentage is even higher for people who remarry. Even if you never get divorced, women typically live longer than men. According to the National Center for Research, 75 percent of women will be widowed at the average age of 56. The reality is that 90 percent of women will be responsible for managing their money at some point.
No. 2: If I work hard, I’ll be rewarded. Unfortunately, this isn’t always true. Typically, women make less money in their lifetimes than men, even if they’re doing the same work. According to the Women Employed Institute, for every dollar a man earns, a woman earns 77 cents.
If you’re working and your employer offers a retirement plan such as a 401(k), you should consider contributing as much as you can, particularly if your employer makes matching contributions.
No. 3: The Caregiver Syndrome. “I took care of my children, now I’m taking care of my parents, and when the time comes, my children will take care of me.” These women are called “The Sandwich Generation.” These missing years in the workplace translate into missing salaries, promotions, 401(k) contributions, pensions, Social Security and other benefits. According to the National Endowment for Financial Education, for every year you stay out of the workforce, it will take you five years to recover that lost income.
No. 4: Men are better at that type of thing, so I’ll let my husband (or son) handle my finances. Many women think they’re not as good with “numbers” as their husbands, so they let their spouses handle their finances. The problem with this is that it leaves women in a position where they know very little about their savings, such as where their spouse keeps all the important financial documents. Women should have a basic understanding of budgeting and cash flow and should know the basics of investing.
You can begin by taking an inventory of your financial portfolio to learn about the different investments you own. Also, be sure to take the time to read your financial and brokerage statements. You may want to consider joining an investment club for women or taking a class on finances.
No. 5: The Scarlett O’Hara Syndrome. “I’ll think about it tomorrow.” We procrastinate about a lot of things in life. We’ve all seen the examples of money growing over time, showing us how, if we started investing in our 20s, our investment would have grown to many times its initial value by now. But that can’t happen until we put a financial plan in place, which is why it’s important for women to stop procrastinating and start planning now.
These are just some ideas on how you can confront these myths and take control of your finances. Maybe you’ve never been affected by any of these myths, but either way, it’s still important to start saving now for retirement. A good place to start would be to talk to a trusted professional who can help you become more financially independent, no matter if you’re single, married, divorced, widowed or retired. Every woman should take an active role in securing her financial future.
Eric Heckman is president of Heckman Financial & Ins. Services, Inc. Eric is a CFP®, ChFC, CLU brings a wealth of knowledge and over 13 years of experience to the field of financial planning. You can contact Eric at www.WealthCreator.com or 297-9800.
