If you’re a woman, chances are you face a tug-of-war of sorts when planning for retirement. You’ve heard the statistics: women earn less, they work fewer years, they live longer, so they need to save more than men. How can a woman win? The facts are:
– 33% of women have less than $25,000 in 401(k) assets, compared with 18% of men.
– 27% of women have more than $100,000 in 401(k) assets, campared with 43% of men
– 27% of women have not made any financial plans for retirement. *
Take Action
Fortunately, if you are working you have two strong allies – your employer-sponsored retirement plan and time. If you are eligible for your company’s plan and have not enrolled, start contributing now. If you already contribute, consider increasing your contributions by one or two percent every year until you reach the maximum allowed by your employer’s plan. By increasing the amount you invest in small increments, you can potentially accumulate more without substantially affecting your take-home pay. And if your employer matched a portion of your contribution, additional funds are added to your plan. Over time even small amounts can potentially add up through compound earnings (the returns on both your principal and future earnings). Your success, however, will depend on your investment strategy. Consider what portion of your retirement plan should be invested in stocks. Although stocks are among the riskiest of investments, time invested may help control risk. The longer you are able to hold on to stocks, the lower your risk of loss and the stronger your potential for gains.
* Sources: National Center for Women and Retirement Research Study and Investor’s Business Daily