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Retirement: It’s nice to get out of the rat race, but you have to learn to get along with less cheese. – Gene Perret
For many people, contemplating retirement can trigger anxiety about having enough money. There are gobs of books one might read to make sure we have saved the magic number. There are worksheets and online calculators that can help determine the amount. While it’s a highly personal calculation, figuring out the number is usually the easy part.
Establishing the plan to get to the number is typically the bigger challenge. Women have a harder time than men with closing the retirement savings gap. We live longer and make less. This isn’t an astounding revelation.
But what causes the gap and how women can make up for it? Allstate is running a brilliant advertising campaign that notes:
The average woman spends 11 years out of the workforce taking care of family. Leaving her without enough money to take care of herself.
Penelope Trunk writes that pay is equal for men and women until there are kids. No matter what your views are on careers and parenting, being a stay-at-home mom puts us at a disadvantage financially. Alternatively, leaving the workforce in middle age to care for an aging parent is another culprit. While more and more men chose to stay home or be the primary caregiver, the numbers are still skewed towards women and therefore the gap remains.
How can we women close this retirement savings gap? Allstate has some ideas:
Make Every Earning Year Count. Right now, only 47% of working women participate in a company retirement plan. American businesses can do much more to help that number grow. 401(k) strategies such as company matches, encouraging participation by part-time workers, automatic enrollment and automatic increases in contributions as employees get raises are all proven ways to help build savings. And the earlier an employee starts saving, the more prepared she’ll be for retirement.
Promote Spousal IRAs. Non-working women (and men) can invest up to $4,000 to grow tax-deferred in a Spousal IRA for the 2007 tax year, as long as there is a spouse in the workforce. The limit will increase to $5,000 in 2008.
Here are some related posts with other ideas:
My Open Wallet: Are You Saving TOO MUCH for Retirement?
Single Ma’s Fabulous Financials: My Next Financial Priority
Tired but happy: Retirement savings versus cash
What are your ideas? How do you plan on making up the gap? Comments welcomed below.
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Nina blogs about money and retirement at Queercents.
