Our thoughts go out to all our policyholders affected by recent severe weather events. If you have any questions regarding your policy, please contact your New York Life agent or call New York Life directly at 1-(800)-225-5695.
New York Life | August 27, 2024
There’s much talk about the gender pay gap for working-aged women versus men, with women earning $.83 for every $1 men earn, according to the AAUW, an organization that advocates for women.1 But the disparity goes beyond this to retirement age, where women are usually less financially prepared for their golden years than their male counterparts.
This discrepancy is problematic due to women’s longer life expectancy. A study by the Brookings Institute says that after a lifetime of generally lower earnings, and more often putting their careers on hold for family reasons, women come up short in retirement.2
But women can and should catch up their retirement savings. Here are five ways to do it:
1. Invest in your workplace retirement plan.
Women who previously were more concerned with capital than aggressive saving should invest fully in their employee retirement plan or 401(k). If you go part time due to childcare or family responsibilities or take time off like maternity leave, don't stop saving — even a reduced amount. And if you become ineligible to participate in your work plan because of part-time hours, open an IRA to save the maximum. In 2023, that's $6,500.3 What's more, if you're 50 or over, you can make catch up contributions that can help rev up savings — $7,500 for a 401(k) and $1,000 extra to your IRA.4
2. Learn more about retirement investing.
Open a brokerage account, invest some money and get a feel for how it works. Invest in companies you care about or whose products you use or people you admire. Having a stake in something “personal" helps provide a connection between you and your investments besides money. Plus, you're likely to learn more when you follow the company news, understand how the product works, or track the company on social media.
3. Up your retirement contributions if you can.
If your contributions to your retirement savings are matched by your employer, contribute up to your company match. Otherwise, you're leaving money on the table. Also, consider raising the percentage of salary you invest. If you're currently contributing 5%, think about boosting that to six or seven. At the very least, sign up for auto increase, which automatically increases your contribution percentage 1% annually.5 Make investing as easy as electronic bill paying by setting contributions to automatic monthly or quarterly payments. And make sure you're investing according to your objective, age, and risk tolerance.
4. Calculate how much you need to retire.
Use a free retirement calculator to plug in the actual values of retirement expenses and account balances to find how much money you'll need to retire. Try this one from New York Life.
5. Talk to your widowed, divorced, or retired women friends and family to find out what they're doing.
Finally, one incredible source of wisdom and experience is right in your own backyard — the women who have successfully gone before you. Even though a financial conversation may feel awkward, broach the subject with trusted women and ask for tips. They can often reveal unique and varied strategies for retirement savings success. Many women you know can offer tips from how to invest unexpected windfalls and tax returns to how they allocate funds in their retirement savings plan.
This article was originally published June 19, 2023.
Go back to our newsroom to read more stories.
Kevin Maher
New York Life Insurance Company
(212) 576-7937
Kevin_B_Maher@newyorklife.com