M. Cindy Hounsell
President, Women’s Institute for a Secure Retirement
When it comes to saving for the future, it’s important to remember that no amount is too small and there’s no better time to start than right away.
When’s the best time to start saving for the future? Right now. Starting saving right away helps create a habit that will benefit you in retirement down the line, and in tough times like now.
Planning for the future includes saving short-term for an emergency fund and long-term for retirement. None of it is easy, and while it’s important for everyone it’s especially so for women, who generally earn less than men but often need more money for retirement. Women live longer, for one thing. They’re also twice as likely as men to work part-time and they take nine years, on average, out of the workforce to care for children and older parents.
The first thing to do is save as much as you can. Saving even five or 10 dollars a week automatically from your paycheck makes a difference. If you don’t have a paycheck yet, you can open an account at a local bank or credit union and start saving small amounts whenever you’re able. Also, use this time to work out the best deals to pay down credit card debt.
Additionally, think before you buy things. Every purchase affects your future, but it’s all a balancing act. So, if an exotic coffee keeps you from getting depressed, do what makes sense for you.
Know your options
Retirement saving is about building a future paycheck, so you can replace your income after you stop working. Its foundation usually comes from Social Security benefits. Register for a social security account to see what your benefits will be, and how that amount will grow if you can wait and earn an extra eight percent a year after your full retirement age. Importantly, make sure your statement of earnings is correct.
Learn investment basics
If your employer offers a retirement-savings plan, find out how it works and how much, if any, the company will match. The best way to start investing may be according to your age in a target date fund, such as the 2050 fund.
If you do not have an employer plan, consider opening a Roth individual retirement account (IRA) if you can find one with no minimum deposit. For women who take time out of the workforce to raise children or care for others, this may be the best option. If you’ve saved money in an IRA, you’ll receive yearly income from it. If you have the funds, you can also create a guaranteed stream of lifetime income by buying a life-insurance annuity to pay basic expenses. Decide by using WISER’s “Your Future Paycheck Calculator”.
Protect your assets
To avoid draining your savings to cover unexpected costs, consider signing up for life and disability insurance especially if your employer offers such benefits. Also consider purchasing traditional voluntary benefits such as dental, vision, accident, or cancer coverage if your employer offers them.
It’s never too late to start bettering your finances and what you save is never too small to matter.