Hamilton Herald Masthead


Front Page - Friday, March 6, 2020

Women may need extra steps to reach financial security

International Women’s Day 2020 is observed March 8. This special day celebrates the social, economic, cultural and political achievements of women. Yet, women still face gender barriers as they seek to achieve their financial goals. How can you address these challenges?

To begin with, you need to be aware of what you’re up against. The wage gap between men and women has closed somewhat but hasn’t disappeared. Full-time female employees earn about 82% of what men earn, the census bureau reports. During a 40-year career, a woman who worked full time would lose, on average, more than $400,000 because of this wage gap, the National Women’s Law Center reports.

Furthermore, a woman turning age 65 today can expect to live, on average, until age 86.5; for a 65-year-old man, the comparable figure is 84. Those two and a half years can amount to much more living expenses.

Plus, by taking time off from the workplace to raise children and care for elderly family members, women often end up with lower balances in their 401(k)s and IRAs than men.

So, what can you do to help even the playing field, in terms of building adequate resources for retirement? Here are a few suggestions:

Contribute as much as possible to your retirement plans

During your working years, put in as much as you can afford to your 401(k) or similar employer-sponsored retirement plan. Most people don’t come anywhere near the 401(k) contribution limit (which, in 2020, is $19,500, or $26,000 if you’re 50 or older), and you might not be able to reach it, either, but strive to do the best you can.

And every time your salary increases, bump up your annual contribution. If you are able to “max out” on your 401(k), you may still be able to contribute to an IRA. If your income exceeds certain limits, you can’t contribute to a Roth IRA, which offers tax-free withdrawals of earnings if you meet certain conditions, but you may still be able to fund a traditional IRA, although the tax deductibility may be reduced or eliminated.

Use Social Security wisely

You can start taking Social Security as early as 62, but your checks can be larger if you wait until your full retirement age, which will likely be between 66 and 67.

And if you’re married, you may be able to choose between claiming your own benefits or receiving 50% of your spouse’s benefits, which could help you if your spouse has considerably higher earnings. (Your spouse does not lose any benefits if you choose this route.)

Look for every opportunity to save and invest

As mentioned above, women often lose out on some retirement savings when they take time away from the workforce to raise families and eventually become caregivers for elderly parents. But even if you aren’t working full time, it doesn’t mean you have no chance to boost your retirement savings.

If you can do any paid work, whether it’s part time or as a consultant, you can contribute to an IRA – and you should.

It’s not easy to overcome the structural disadvantages women face when seeking to reach financial security. Taking advantage of the savings and investment possibilities available can help you make progress toward your goals.