Women and Retirement: Separating Fact and Fiction

4 Costly Misconceptions About Women And Retirement

September 15, 2017

By Gina M. Sitzmann
Vice President & Trust Officer

By now you know you can’t judge a book by its cover, an online article by its headline, or wine by its price tag.

You also can’t judge your own preparation for retirement based on the advice of people who have never seen your balance sheet. For women in particular, misconceptions about money and retirement often put our future financial security at risk. Here are a few statements we often come across, when it comes to discussing our female clients' financial futures:

"You Need a Lot of Money To Begin Investing"

Fiction.

There are a variety of investments that require only a small cash outlay. For instance, many women choose to use monthly automatic deductions from their checking or savings accounts to slowly add to their savings and retirement tallies. Keep in mind that the number of years your money remains invested can be a bigger factor in how much you have accumulated at retirement than the total investment amount. Waiting until you have a large sum to invest can actually leave you with a smaller nest egg than you would have had if you made a small investment early in your working years and reaped the potential benefits of compounding. 

Our Tip: Start small. Start now.

"today's Women in the Work Force Are Better Off in Retirement than Their Older Counterparts"

Fiction.

On average, women still earn less money than do men — and save less as a result. They are also more likely to work part-time or leave the work force altogether to care for children or elderly parents. This gives women fewer years to invest and may reduce the amount of money they have for retirement. Coming up with a retirement investing strategy and sticking with it can help keep you on track.

Our Tip: Enlist the help of a financial advisor and buckle up; women must be more careful in their saving and spending habits to make up the gender gap. 

"A Woman Can Rely on Her Husband’s Health and Retirement Plans"

Fiction. 

Statistics show women are more likely than men to spend part of their retirement years alone. Divorce or your spouse’s death could leave you without sufficient assets. Even if you and your spouse are able to live out your retirement years together, having your own retirement plan, rather than depending solely on your spouse’s plan, is important. Assets from two retirement plans may allow for a more comfortable lifestyle or offer a cushion if one plan doesn’t perform as expected.

Our Tip: Start saving in a Roth IRA if you aren’t contributing to an employer-sponsored plan.

"Social Security Benefits Will Make Up Any Retirement Income Shortfall"

Fiction. 

You may think you can count on Social Security to make up the difference if you don’t reach your goal. But for 2017, the average Social Security benefit is just $16,320 per year.

Our Tip: Don’t include Social Security in your retirement plan if you can help it. When — and if — you do receive, it, the additional funds can be used as cushion, instead of being relied upon for full support.

 

When it comes to your financial future, a trusted financial advisor can always help you separate fact from fiction. Schedule an appointment today with an SNB Wealth Management team member — we're here to help!