January is always a good time to take a deep look at our finances. I know that after the holidays and all the spending that was involved (Christmas for a family of eight gets expensive very quickly. Then throw in an 80th birthday party for my parents and a few days spent in San Francisco post Christmas where the spending continued), it was time to take a deep look at where we stand financially.
I admit, I was a bit afraid to look at my statements last week. I drew a deep breath of relief to see that my spending did fall within our planned budget. Mostly. My husband and I planned our budget ahead of time, and I was keeping track of the spending all along, but still the fear of the unknown can creep on in.
But beyond budgeting we need to be thinking about savings, and at my age the number one savings concern is saving for retirement. Truth be told retirement planning is a women’s issue. Not that men don’t need to be prepared, but just look at the numbers…
Retirement Planning is a Women’s Issue
When I look at the life issues faced by both men and women, but specifically woman, I am faced with the issue that retirement planning is really a women’s issue. Or more importantly that the lack of retirement savings becomes a women’s crisis. There are a few important factors to take into consideration.
- Women live longer. For U.S. men, the average life expectancy is 76, while it’s 81 for U.S. women. That’s a five year gap. Both of my grandmothers outlived their husbands by nearly 40 years!
- Women more often than men take work breaks to raise children. I was out of the work force for nine years. Some women take less time and some take more. But this break in work affects our social security and often the rate we move up the pay scale.
- There is a gender pay gap. Women working full time in the United States are typically paid just 80 percent of what men were paid.
- There is also a gender investing gap. Women invest less and most often park their money in cash.
All of these factors combined scream that a lack of retirement savings will be a women’s crisis as we age. We need to take care of ourselves now and for our futures.
As women we need to do our homework. Learning to invest is not hard, but does take thought. The first step is planning and having the conversations. Paying down debt, creating your emergency fund, maxing out work retirement savings, getting the matching on our 401(k)s, understanding your tolerance for risk, and identifying investment vehicles all come next.
With the the Dow Jones Industrial Average closing above 25,000 last week and rising almost 20% this past year, the bulls are looking forward to another year of substantial growth; however, there is no crystal ball, and past performance is not an indicator of the future. You really do have to do your homework!
If you want some reading, these books come highly recommended, but no, I have not yet read them. I am just starting The Essays of Warren Buffett: Lessons for Corporate America. I look forward to reading and learning more about investing from one of the greatest investors out there.
- Prince Charming Isn’t Coming: How Women Get Smart About Money by
- Worth It: Your Life, Your Money, Your Terms by Amanda Steinberg
- On My Own Two Feet: A Modern Girl’s Guide to Personal Finance by Manisha Thakor
- Sacred Success: A Course in Financial Miracles by by
- The Essays of Warren Buffett: Lessons for Corporate America, Fourth Edition by
As a woman, where are you in closing the investment gap? In planning for your retirement?