By Angela Dorsey
Retirement is arguably the most talked-about financial topic, and rightly so. Our retirement years can span decades and require sizable assets to take care of all our needs in our non-working years. But the exact amount of those sizable assets we need can be tricky to pinpoint, especially with the glut of contradictory and overwhelming advice that often just leaves us confused.
For example, we are told that we need X amount for a 20-year retirement, or that we should contribute X amount to our 401(k). It sometimes feels impossible to make sense of all this information and know how to apply it to your own situation, especially as a professional woman. A lot of general guidance available doesn’t take into account some of the unique challenges you face. Is there a way to figure out if you’re on track?
The Numbers Tell The Story
While most studies that report median retirement savings by age do not break down the results by gender, there is still plenty of information about how women are faring when it comes to preparing for retirement. Let’s take a look at the numbers.
How much do you have saved for retirement? If you have anything saved at all, you are doing better than 19% of working women. (1) Considering how women face a wage gap (2) and also spend more years out of the workforce than men, this number is worrisome. While this statistic may make you feel good about yourself for having something saved, it doesn’t guarantee you a comfortable retirement, so don’t settle yet.
Where does saving for retirement rank on your financial priority list? Most women say it’s all the way down at #5. (3) It’s understandable, with rising costs of living, lower pay, family needs, and debt, it’s difficult to find the money to put saving at the top of the list.
This is the median amount women have reported saving for retirement. (4) While you may not know how much you need for retirement, we can be sure it’s more than $23,000. Which begs the question: how much do you think you need? Both women and men expect they will need to have saved $500,000 by the time they retire in order to feel financially secure, with most women coming up with that number by guessing. (5) Everyone’s financial needs in retirement are unique, but with inflation, longevity, and high medical and long-term care costs, even $1 million may not be enough to last you your entire retirement. (6)
General financial advice tells us we should save 10-15% of our gross income to save enough for retirement, (7) but women, on average, only save about 8% of their salary. (8)
The average retirement age for women in America is 63, (9) but over half of women surveyed said that they plan to retire after age 65 or not at all, primarily for financial reasons. That may be because 32% of women admitted that they expect Social Security to be their primary source of income, but Social Security is only designed to cover 40% of your pre-retirement income. (10) With more years out of the workforce to care for family members and lower wages than men, women face lower Social Security benefits and a higher need to self-fund retirement through personal savings.
What Do I Do With This Information?
Whether you are patting yourself on the back or biting your nails after reading these numbers, the fact of the matter is that you won’t be living the same retirement as your peers and the obstacles you face leading up to retirement will be different as well. Therefore, you need to figure out how your savings compare to the cost of the retirement you desire. There are a plethora of online retirement calculators, but they are often very generic and fail to take into account the various vital factors that will impact your unique personal situation. If you would like to increase your financial knowledge, here is a list of 10 great financial books to consider reading.
As a professional woman, you may face more challenges in preparing for retirement than men, but that doesn’t mean you have to admit defeat and settle for a less-than-ideal retirement. You are armed with education, a great job, and hopefully, someone to guide you through the obstacles. A financial professional who specializes in working with women and is familiar with your life situation and opportunities can help give you the peace of mind that retirement will be all that you want it to be. They can run a thorough analysis, utilizing their expertise as well as modern technology to more accurately show you different possible retirement outcomes and how to prepare for both the good and the bad.
When you work with us at Dorsey Wealth Management, you won’t get a cookie-cutter solution. We employ personalized strategies to simplify your finances and get you on track toward your ideal future. If you feel like you are falling behind and are tired of staying up at night wondering if you will have enough money to retire, easily schedule a free introductory 30-minute phone call today!
About AngelaAngela Dorsey is the founder and fiduciary financial advisor at Dorsey Wealth Management, a fee-only financial planning firm helping successful women and couples prepare for retirement. Angela earned a BS in computer science from Loyola Marymount University, an MBA from UCLA Anderson School of Management, and spent 20 years as a Senior Compensation Specialist in large corporations before becoming a Certified Financial Planner™ (CFP®) and a Registered Investment Advisor (RIA). That background gave her the tools to couple with her passion for empowering women to make the best financial decisions possible. Angela lives in Torrance, California, with her husband and two children. She enjoys spending time at the beach or surrounded by nature. To learn more about Angela, connect with her on LinkedIn.