Women are struggling to make their retirement funds last, according to a recent study by the Alliance for Lifetime Income (ALI), an insurance and investment group, which produced a “State of Women 2022” report with HerMoney.com. This is because their income is hampered by the persistent wage gap and the burden of taking on more family responsibilities.
There are, however, ways for women to counter this trend and create a more sustainable retirement income. The best answer for women and anyone looking to maximize their retirement income is to employ the help of a professional. Contact a local Financial Advisor as soon as possible to optimize your retirement plan.
Why do women struggle to sustain their retirement?
Women fail to make their retirement savings last due to several factors:
-
The pay gap
-
Stagnant revenues
-
Loss of years of income
-
Longer life expectancy
The pay gap
Global wealth inequality between women shows that pay is 74% of what men’s wages are. The missing 26% is largely due to a lack of corporate pay equity and a lack of women’s bargaining power. Women are not as likely to ask for more for fear of rejection. The result is a decline in retirement savings.
Stagnant profits
The employment system is traditionally set up in a “work, learn, earn” process. You work in a defined field or industry, learn on the job through training gaining expertise over the years, and earn more to reflect those years of applied skills and knowledge.
Unfortunately, it is common for women to see their income stagnate either by being passed over for promotion and/or by not advocating for appropriate salary increases.
Loss of Earning Years
Women, as mentioned, are the primary caregivers 81% time for children and elderly parents. The common tendency for this is to miss work, go part-time, or stop working altogether. These years of lost earnings have a cumulative effect on lost wages and translate into thousands of missed retirement savings.
Longer life expectancy
Women tend to live longer than men, which means they have to stretch their savings to meet their retirement needs. While some women will work longer to fill the gap, it’s no surprise that when given the opportunity, most people choose to retire when they can rather than continue working.
The blunt way to put it all is that being family oriented, insecure in financial negotiations and living longer works against them.
The best answer to achieve sustainable retirement savings
The problem is not to build up the savings but to make them last. Alliance for Lifetime Income (ALI) says that while 73% of women know how to build a retirement nest egg, only 47% know how to make it last. The group’s “State of Women 2022” report, produced with HerMoney.com, finds that women who work with a finance professional are “significantly more likely to know the steps to take to ultimately withdraw their money in retirement” – (58% vs. 39%).
The essential
Working with a financial advisor has a long list of benefits ranging from retirement planning to proper asset allocation. While choosing the right fiduciary advisor because you may seem like a daunting task, we’ve done the heavy lifting. Using SmartAsset’s Free Financial Advisor Matching Toolyou can be matched with an advisor who serves your area and who is legally bound to act in your best interest.
Tips for finding a financial advisor
-
The people who have financial advisors report greater financial security. Research also suggests that work with an advisor can result in additional annual returns on investment. SmartAsset’s free tool matches you with up to three financial advisors that serve your area, and you can interview your corresponding advisors for free to decide which one is best for you. If you’re ready to find an advisor who can help you achieve your financial goals, start now.
-
Before hiring a Financial Advisorit is important to understand how much their services will costt. Most advisors charge a percentage of your assets under management, although you may also incur other fees.
Photo credit: ©iStock.com/Nattakorn Maneerat, ©iStock.com/kate_sept2004
The post office The secret for women to make their retirement income last? Get a financial advisor appeared first on SmartAsset Blog.