When I started my career, I was part of a dual-income household. Three children and one debilitating back injury later, I have become the sole provider for my family.
I know I am not alone, 40% of American households have a woman as the primary breadwinner.1 This shift from the traditional homemaker role has left many women to perform the non-stop juggling act of working, running the household, and managing the family’s finances. With so much to deal with, many women put saving for retirement on the back burner.
Prioritizing self-care is always tricky for women, but planning for the day you can finally stop working should be at the top of every woman’s to-do list. I know how hard it can be to put yourself first, but the list below provides three things every woman should think about when it comes to retirement:_
1. Competing priorities does complicate retirement planning – but it does not make it impossible
If you’re responsible for your household’s income, children’s education, and/or the care of your aging parents, it can be difficult to prioritize saving for your own retirement above the needs of your loved ones. It may even seem selfish to put money away for you own future, but your ability to take care of others is also dependent on your ability to take care of yourself.
Studies show that working women continue to perform the majority of housework and child-care duties. So it’s not surprising that female breadwinners prioritize immediate financial matters (i.e. paying tuition and utility bills), but struggle to find time for longer-range financial planning. That’s where working with a professional can have a big benefit.
A good advisor will help you identify where you stand financially right now and create goals that clearly identify where you want to be in the future. Once you know your financial goals, you can create a financial plan that identifies the steps you need to take to pursue those goals. Building a plan will help you pinpoint key opportunities and weaknesses in your finances and then take action.
2. Trying to “have it all” might leave you with less
We all want the best of everything for our loved ones and we all want to have a financially secure retirement, but “having it all” might not be possible. It’s important to put spending and savings decisions you make today in context, and understand how those decision may have long-term effects on your future.
One common tradeoff I see women struggle with is prioritizing funding their children’s college over their own retirement saving. I think it is important to remember that your children can get scholarships or loans to help fund their college, but neither of those options is available for your retirement.
3. You need to plan for the long long-term
With advances in overall heath and healthcare technology it’s extremely likely that if you retire at age 65, you will live another 20 years or more. Your assets will need to generate enough growth to accumulate a nest egg, outpace inflation, and provide income for the long term. Part of the ability to grow your wealth is assessing the tradeoff between risk and reward.
Many women have a tendency to be risk-adverse when it comes to investing, but you need to understand the hazards of being too conservative. With the recommendations and support of a good Advisor, who can help you asses the risk/reward trade off, you should have the confidence to step a little out of your comfort zone.
As investors, women face unique obstacles in terms of both earning money and making that money grow for the future. Despite this challenge, women also have equal access to financial planning and investment advice. Accumulating adequate resources for longer lives requires substantial savings coupled with reasonably aggressive investing - both of which women are more than able to do.
1Pew Research Center analysis of Breadwinner Moms