More women are choosing to stay single these days or are divorced or widowed by the time they reach their 50s. Therefore, it's critical to make retirement planning a priority—whether you're married or single, in your 20s or your 40s.
Because women earn less over their lifetimes than men due to lower salaries and fewer years worked overall (since many women take some time off to care for kids or aging parents), women have to be more aggressive at saving and investing or risk retiring in poverty, says Christopher L. Hayes, co-author of Money Makeovers: How Women Can Control Their Financial Destiny.
While married women may cling to the illusion of security because they have a spouse, Hayes says many married mid-life women are unaware of the impact that singlehood may eventually play in their lives as they age. In fact, recent research indicates that 59% of women over the age of 65 won't have a spouse to take care of them due to divorce or widowhood, according to the Center for Aging Research & Education. However, some common sense can keep you from facing an insecure financial future.
Step#1: Start saving for retirement right now.
It's never too early or too late. If your company offers a 401(k) or pension plan, you should invest as much as you can, and if you don't have a company-sponsored plan, you should put aside some money from each paycheck into a separate savings account that you don't touch.
Step#2: Live within your means.
Interestingly, it's not always those big-ticket items (like those $650 Manolo Blahniks) that eat into your income; it's those regular expenses such as your twice-a-day $4-a-shot cappuccinos that quickly add up over the course of a month or year. To make matters easier, review your monthly cash flow to get a handle on where money is going. Once you get a clearer picture of your spending habits, you can set a budget and then figure out ways to cut out unnecessary expenses. Remember: You can (and should!) still indulge in luxury items, but be sure you're controlling your spending and not the other way around.
Step#3: Minimize your taxes.
Make sure you maximize and keep track of your deductible expenses. These simple steps can also help.
Step#4: Pay down debt.
Try to pay off any outstanding debts, such as large credit card bills. Living on credit means you're not saving money. Call your credit card company and ask if they can offer you a better interest rate. Oftentimes, you can negotiate a better rate simply by asking. If they're unwilling to, consider transferring your balance to another group.
Step#5: Learn about basic money management.
The Internet is an excellent resource that gives you instant access to a wide variety of financial advice. If you're considering investing, you may want to consult with a financial advisor to devise a strategy that fits your resources, investment time horizon and risk profile.
Don't Suffer From Tunnel Vision
When you're young, it's hard to imagine that you'll be older one day and possibly unable to manage your finances. These days, many baby boomers who are near retirement age find they can't afford to retire and maintain a decent standard of living. Don't find yourself in that situation. Prepare now, and remember: Every little bit helps.
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on SingleMindedWomen.com do not constitute professional tax advice or
regulated financial advice, which recommends a course of action based
on the specifics of your personal circumstance. These articles are
intended to provide general personal finance information. Please
consult a financial professional or tax advisor before making any
important decisions.