Women and Finance: Are You Saving Enough?

Women and Finance: Are You Saving Enough?

July 07, 2021
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In April, when much of the country stayed home to avoid the COVID-19 pandemic, the personal savings rate hit a record 32.2%. People were saving as much money as they could in a time when the future seemed uncertain. While the rate has calmed down considerably since then, it hasn’t quite returned to its pre-pandemic rates.

While it is prudent to take certain financial precautions in difficult times, it’s also important to remember that a good financial strategy takes good times and rough times into account.

However, when it comes to saving for retirement, many working women are falling short. 

Studies show that almost one-fifth, or 19%, of working women have nothing saved for retirement. The problem stems from the fact that women still earn less than men.  As of 2018, women earned 85% of what men make.

If women are earning that much less than men, yet their expenses are not any less — that has a direct impact on the amount of money they have available to save for retirement. A survey also found that 14% of women didn’t know how much money they had put away for retirement.

When it comes to race, black working women were less likely than their white counterparts to have nothing in retirement savings — 14% versus 22%. Yet, 24% of black women didn’t know how much they had saved, compared to 11% of white women.

The lack of knowledge around the amount in savings could have to do with fear about whether it is enough. Some women are saying, "I’m socking money away, I don’t know if it’s enough — I’m just doing it,” They don’t know how to translate if it is enough.

Start Where You Are

If you haven’t started saving for retirement yet, or are far behind, there are things you can do to get on track. Start where you are, with what you have. Ideally, try to save about 15% of your gross income, but just get started. Start with saving 1% of your gross income. Add 1% each month to your savings until you reach the 15% milestone.

Also, sign up online with your bank to automate your savings into and increase the amount saved every year. Set it and forget it. If the money doesn’t hit your bank account, you won’t spend it.

If you have a 401(k) plan at work, find out if your employer matches your contributions. If so, at least contribute up to that amount so that your employer contributes, as well. If not, you are leaving money on the table.

Focus on Your Debt

Consolidate your debt into one low-interest credit card or loan. Take any money you save on payments and apply it to a savings account. If you are not able to consolidate your debt, start paying off the debt with the highest interest rate first.

As you get raises at work and possible bonuses, put that money right into your savings account, as well. The idea is to try to save at least 9-12 months’ worth of living expenses. If you have an unexpected layoff or illness, you will be able maintain your standard of living for at least a year. That should be comforting to know.

As your financial life shapes up, increase your contributions to your 401(k) until you can reach the maximum allowed for the year: $19,500 for 2021, as well as an additional catch-up contribution of $6,500 if you are over age 50.

If you don’t have a 401(k), consider opening up an IRA (Individual Retirement Account) account or a brokerage account and start contributing.

Get Educated

Women, as a whole, tend to lack confidence around money. This stems from a lack of knowledge and exposure to money, even though they may be “super smart” with great careers. 

This lack of knowledge also may cause women to be very conservative when they do invest. They fear they’ll lose money if they become too aggressive. Yet, women need to be more forceful because of the wage gap and because they generally are facing a longer lifespan than men.

Figure Out Your Number

While you may hear that you need to have millions of dollars saved for retirement, it really depends on a number of things. Figure out how much or what number you need to retire comfortably.

Don’t let that number scare you. Instead, just try to save 15% of your gross earnings. 

Consider speaking with a financial advisor. While there are those who focus on high net-worth individuals, there are also advisors who cater to “regular working people.”

We are not quite out of the woods yet as far as COVID-19 is concerned, but we’re also at a point where life after the pandemic has begun to take shape. This life is being visualized not just by scientists and officials but also by financial professionals like me.

It may be time to have a conversation about your overall financial strategy, with the days ahead firmly in mind.

I look forward to having a conversation with you about your goals and the choices ahead for you. Let’s schedule a conversation at your earliest convenience. Click on the link below.

https://calendly.com/gowdyfinancialgroup/30-minute-consultation


Gowdy Financial Group, LLC., is a Fee-Only, Financial Advisory firm dedicated to helping women, from all backgrounds and income levels, get out of debt, save toward your goals and enjoy the freedom that comes with being in control of your money. We don't sell products; we provide solutions. "Your Goals. Our Solutions." Serving Clients Nationwide. 


This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided, are for general information and should not be considered a solicitation for the purchase or sale of any security.