Women's Retirement Savings Strategies
Five Simple Strategies for Building Financial Security

By Hollee A. Kier

The old toast, “Here’s to long life and good health,” was never more appropriate than for today’s women. That’s because women are living longer than ever before – more than 5.3 years longer on average than men. Yet, the advantage of living longer comes with a responsibility of supporting the cost of a longer retirement. And that’s where women are at a disadvantage.

According to the Women’s Institute for a Secure Retirement (WISER), women earn 77 cents for every dollar a man makes, are more likely to work part-time, and have shorter work tenure due to raising children and caring for aging parents. On top of it all, they receive only half the pension benefits that men receive . Since they earn less while working and have less to count on when they retire, many women are forced to deal with negative financial consequences during retirement.

Perhaps it’s no surprise, then, that women tend to feel anxious when it comes to their financial futures. A study commissioned by Northwestern Mutual examined women with a household income of $75,000 or more, and found that 62 percent of these women are concerned about not having enough savings to maintain their lifestyle, compared with only 37 percent of men in this same demographic .

Other tell-tale findings from the 2006 study underscore women’s financial anxiety. Women view the following areas as a “major concern,” as compared with men:

• High cost of health care coverage (79 percent of women vs. 60 percent of men)

• Adequacy of income available during retirement (67 percent of women vs. 42 percent of men)

• Future of Social Security (62 percent of women vs. 32 percent of men)

• Major healthcare concerns (53 percent of women vs. 39 percent of men)

The good news is that women are continuing to close the gender gap in the working world, while gaining knowledge and power to overcome these financial challenges. Consequently, women are taking the initiative to build a financially sound and secure retirement for themselves.

The following are basic, easy-to-follow strategies to help women improve their financial know-how and enhance their retirement outlook:

Strategy #1: Get Informed and Start Now
Women reading this article already have a jump-start on this strategy. Understanding the need for preparation and learning the facts is a vital first step toward retirement. Women need to take charge of their own financial situation, especially considering the fact that a number of women will be solely responsible for their finances at some point in their lives. Factors such as divorce or death of a spouse may require women to provide for themselves.

It’s critical for women to know and understand their benefits. For example, is there a 401(k) or pension available? Life or disability insurance? How much are these worth? Also, if they’re married, they should be familiar with their spouse’s benefits and understand how they affect the family.

Getting started on a plan sooner, rather than later, just makes good sense. The sooner saving starts, the greater the return will be upon retirement.

Strategy #2: Pay Yourself First
An effective financial strategy is to pay something into a savings or retirement fund – even before any bills are paid. In fact, the best way to “pay yourself” before even getting a paycheck is through an automatic deduction, a la 401(k) plans. If you never see it, you never miss it!

The old rule of thumb says people should save 10 percent of their income, but recent research is showing that women will likely need more to make up for wage discrepancies and time out of the work force. Women should talk with a financial professional to determine their individual financial goals. In fact, the Northwestern Mutual study also found that women who work with a professional are less likely to express major concerns about savings and income in retirement, and feel more optimistic about the performance of their investments.

Strategy #3: Bank Your Windfalls
Women getting by on what they earn now should consider investing any extra money that comes in. Pay raises, bonuses, commissions, tax returns and inheritance can all be invested and saved for retirement.

Strategy #4: Leave it Alone
Once the savings begins, leave it alone and watch it grow. However, it’s important to track performance and re-evaluate asset allocation at least annually – many factors affect one’s financial situation. Women should also resist the temptation to dip into their retirement savings.

Strategy #5: Be a Role Model
A good reason to begin and maintain a retirement savings program is to give kids a good example of responsible money management to follow. Younger siblings, friends and employees can also learn and benefit from our examples. Teaching kids about saving, investing, responsible use of credit cards and debt management are indispensable examples that will help enrich their own financial futures. One idea is to start a “401(kids)” program – an incentive program where parents “match” their child’s investment – just like an employer gives employees an incentive to save.

By learning about financial matters, getting started on a plan and following basic savings strategies, building financial security is realistic and attainable for almost any woman. A proactive and strategic approach to finances today can lead to good news financially tomorrow.

About the Author
Article prepared by Northwestern Mutual with the cooperation of Hollee A. Kier.

Hollee Kier is the managing director in the Clearwater, FL office for the Northwestern Mutual Financial Network. Her mission as a Northwestern Mutual Representative is to help you identify your current financial picture with your future financial goals. Along with a Network of Specialists, she provides innovative solutions using world-class insurance services and internationally recognized investment products. You can contact Hollee at 727-799-3007 or hollee.kier@nmfn.com.

Resources
U.S. Census Bureau, as reported by Milwaukee-Journal Sentinel, February 20, 2006
2 www.wiser.org, November 10, 2006
3 Northwestern Mutual Financial Network, Women $75K+ on Financial Matters, March 2006
4 Northwestern Mutual Financial Network, Women $75K+ on Financial Matters, March 2006