What Women Can Do Now To Amp Up Financial Independence Going Into Retirement

A large amount of people in North America are still unprepared for retirement, but it turns out the female population is facing additional roadblocks to financial comfort in their retirement. Reports have shown that although women save more than men do for retirement ($150,000 compared to $135,000), they take longer to get there. More recently, an alarming amount of women were shown to believe they will need to work past their retirement age. According to a study by the Federal Reserve Bank Of New York, 54 percent said they expect to work past the age of 62, while 38 percent expect to still be working by their 67th birthdays. This shows a stark contrast when compared to the 52 percent of men expecting the same, and a marked decline for them from last year’s statistics. As women try to play catch up on the retirement and payscale front, many are searching for ways they can bridge the gender gap and improve their financial stability on retiring. The key to it all? Getting started right now.

Start Saving As Soon As Your Income Begins

The truth is that women face a unique set of issues in the preparation for retirement, and throughout their career, in fact. The difference in salaries, and time off for childbirth and childcare, along with the long-standing work-family juggle often means many women find themselves unprepared for retirement. A CIBC study showed that 7 in 10 women prioritize elder and childcare above their financial security, yet only 6 in 10 of them have a plan for life after retiring. The sooner that women can formulate a retirement plan, the better chance they have of being financially ready when the time comes.

This particularly applies to a key part of any retirement plan: saving. Starting early (preferably in your 20s) means you have a longer time to build up savings and longer to reap benefits from any interest rates that your investment and savings options may offer. Check with your employer about any sponsored retirement plan and the corresponding contribution limits. Alternatively, you can opt for an RRSP which offers an annual contribution limit of 18 percent of your salary (or $29,500 for 2019). Step up your cost-cutting and budgeting efforts in a bid to maximize these contribution limits. For those who are well into their career, the same principle applies: start saving now and make use of the extra years before you planned to begin saving.

Split Those Savings Into Cash And Investment

Women are not only less likely to invest, but they also invest 40 percent less than men do. However, it turns out that the women that do invest earn higher returns than men do. The hesitation to invest shown by women continues to impede on their ability to build their nest eggs. When accelerating your savings, make it a point to separate those monthly savings into separate savings pots, including one for your traditional savings account, one dedicated to investment, and one for a sinking fund. If you’re wary about investing, many online resources offer crash courses on the stock market or alternative investment options. For those confident enough, there are also Robo advisors that offer personalized investment options according to your preset risk appetite.

Set Up Secondary Income Streams Earlier On In Your Career

Finally, consider setting up secondary income streams as soon as possible. Many women consider passive income streams or side hustles when approaching or amid retirement. However, by doing so, you are essentially forgoing valuable time that you can use to make that income stream self-sufficient and stable. Starting early on in your career means you may have more time to dedicate to it (before family commitments begin). With women earning around 80 percent of what a man earns, finding ways to make that reduced income go further is key – and an income stream is one great way to do this. Lack of income fuels debt for 35 percent of Canadian women, with many relying on credit cards for even small purchases such as groceries, according to BDO Canada’s recent poll. Coupled with the rising interest rates of credit cards and common misconceptions about using these revolving finance tools, more women are finding themselves living paycheck to paycheck and overwhelmed by their finances, further highlighting the need to establish secondary income streams.

For professionals, consider freelancing in your spare time. Offering your services on freelancing platforms such as Peopleperhour.com or Fiver gives you control over your work schedule, but also provides additional income for a skill you may already possess. You can also consider reselling items such as clothing. Women spend three times as much on fashion, and often items of clothing are left packed away. Why not recoup some money from reselling them at car boots or online?

While the retirement finances picture may look very different for women, the key to changing it lies in being proactive and doing so right now. Taking control of your financial future means controlling your spending and actively making the effort to multiply your current income streams.

Thanks to Jane Sandwood