5 Facts That Threaten Women’s Retirement Income and 4 Ways to Overcome Them
In this day and age where women are advancing in careers and business ownership, and experiencing success their predecessors only dreamed of, they still lag behind men in one key area: saving and planning for a financially secure retirement.
Women are at risk of experiencing a financial shortfall in retirement. In other words, they risk outliving their money.
The five primary economic and social factors that threaten the financial security of women in retirement are:
- Women’s lifetime income is less than men’s due to the fact that they take time out of the workforce to care for loved ones. Which means they don’t get to enjoy the financial increases over the life of their careers that men do.
- Women tend to work part time – or not at all – in order to stay home with the kids.
- Therefore they contribute less to retirement savings and earn less Social Security benefits, which translates into lower retirement income.
- Statistically, women outlive men, which means they need more money to live.
- Because women live longer, their cost for healthcare (i.e. long term care) is more than men’s.
As pervading as these factors are to women’s financial security, there are ways to mitigate them.
Here are four ways women can improve their financial security for retirement.
- Start saving as much as you can for retirement. Take advantage of workplace retirement plans. Visit your HR department and arrange to begin payroll deductions. If you already contribute, increase the amount.
- Start saving after tax dollars as well. This way you can create tax-diversity in your retirement income. The last thing you want is to have all of your income be at the mercy of future tax rates.
- Take a look at your monthly expenditures to determine where you can find more money to save. Make a decision to cut way down on expenses today in order to save more for your future. Your future self will thank you profusely.
- Get educated about retirement planning for women. Learn about all the various ways you can save for retirement and make your retirement savings last longer. Even if your husband “handles all the finances.” Like anything else, two heads are better than one. If you’re a single gal, find a financial professional you feel comfortable with and let them help you create a plan.
Why Lasting Change Is Hard
Before we had any children, my wife and I lived in the heart of Dallas. One day, on our way back to our house, we were driving down Skillman Avenue when we were caught in a sudden torrential downpour.
The rain was coming down incredibly hard, which wouldn’t have been a problem if the storm drains were equipped to handle that much water. Instead, the road itself filled with water faster than we could have anticipated. Quickly, the water rose up the side of our car. Trying not to panic, we realized that we could not continue and would need to turn around and get to higher ground.
Water rising up the side of your car door is the kind of roadblock you might not expect to encounter, but when you do, it’s formidable. We couldn’t drive through it or even around it. We had to deal with it quickly or face serious consequences.
When we’re trying to implement change in our own lives, it’s important to identify and plan for common roadblocks to lasting change.
The first and, in my opinion, most important roadblock to lasting change is not addressing the real issue.
Let’s say you wake up in the middle of the night with a sore throat. You’re annoyed by feeling sick but your throat really hurts, so you get up and spray a little Chloraseptic in your mouth and drift off to sleep. When you wake up the next day, you still have a sore throat, so you pop in a cough drop and go about your day.
The change you’re making – using a numbing agent – might work if you’ve only got a cold, but if it’s strep throat, you’re not addressing the real problem. Only an antibiotic will cure what ails you, even if Chloraseptic will keep the pain at bay for a while.
Just like how more information is needed to diagnose your sore throat than one feeling, problems you encounter in your life or business require diagnostics, too. Figuring out the real problem – not just your most apparent needs – requires some introspection and a little bit of time.
Here are eight questions to ask when you need to discover the root cause, courtesy of MindTools.com:
- What do you see happening?
- What are the specific symptoms?
- What proof do you have that the problem exists?
- How long has the problem existed?
- What is the impact of the problem?
- What sequence of events leads to the problem?
- What conditions allow the problem to occur?
- What other problems surround the occurrence of the central problem?
Once you have your answers to these key questions, you can’t stop there. Your vantage point is skewed from your own perspective. You’re going to want to ask someone else to evaluate the problem at hand with the same questions and then compare your answers.
If you and all of the partners at your firm have similar answers, you’ll know you’re on the right track. If you wind up with wildly different ideas, I suggest seeking the advice of someone outside your organization. Fresh eyes can make all the difference in understanding a problem.
I often talk about being ‘too close’ to understand. You’ve probably heard the illustration about a group of people standing by an elephant with blindfolds on, trying to describe what they’re experiencing. Depending on what part of the elephant you’re next to, you’re going to have different observations.
But someone outside of that elephant’s cage can clearly identify the elephant.
The first key to making a lasting change is to make sure you’ve addressed the real problem and are looking for authentic change.
Next time, we’ll address the second major roadblock to creating last change.
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