Fulfilling your vision of retirement calls for careful planning, and women have unique circumstances to consider. Women tend to live longer, are more likely to require long-term care services as they age, and often take more time out of the workforce to care for family members. These financial realities have significant implications for how women plan for their financial future.
In a study by Women & Co., when asked what financial choices women wish they had made differently, they answered: save more and start saving earlier. To help women keep their retirement planning on track, Lisa Caputo, Founder, Chairman and CEO, and Linda Descano, CFA®, President and COO, of Women & Co., reveal ten retirement mistakes to avoid:
1. Not setting goals. Sure, you can imagine your retirement, right? A picturesque time of life filled with leisure, family, and the freedom to choose how to spend your days. But, when it comes to planning for retirement, a little more detail can go a long way. Ask yourself: When do I want to stop working? Where do I want to live? How do I want to spend my time? Then discuss your thoughts with your spouse/partner.
2. Putting college savings ahead of retirement savings. It’s tempting to put money aside for your children’s college instead of retirement. But while there are other options to fund college—grants, loans, scholarships, etc.—there are no other options for funding your retirement. Save for your retirement first.
3. Not starting early, taking breaks, or cashing out. Saving consistently is a gift you give to your future self. If you cash out your retirement funds (e.g., when you change jobs) or delay saving, you may not be taking advantage of compounding interest and may miss out on matching programs and other retirement benefits your employer may offer.
4. Not understanding your sources of retirement income. Determine what you’re entitled to from Social Security, pensions, and the like. Estimate how much money you’re likely to need and determine if your savings can cover the difference from your expected benefits. If not, step up your savings.
5. Not planning for a long enough period of time. The average life expectancy for women is eighty and for men it is seventy-five, so women are more likely to need long-term care services as they age and their retirement nest egg needs to last over a longer period of time, which puts women at higher risk of outliving their savings.
