March is Women’s History month, and though we have come a long way in terms of women’s rights and equality, there are still major inequalities, especially financially. When it comes to retirement, many women simply aren’t prepared. The U.S. Department of Labor notes that women are more likely to work jobs that don’t qualify for retirement plans, and also more likely to interrupt their careers to tend to family. But with women having longer life expectancies, our credit counseling advice for them to be sure to have enough money put away for retirement.
Of the 62 million wage and salaried women in the U.S., 45 percent have contributed to their retirement plan. That leaves 55 percent of women unprepared for the future. With women earning less over a lifetime than men do, they need to be able to protect their financial futures. A 2012 Government Accountability Office report states that 12 percent of elderly women are living in poverty, compared to 7 percent of men. For divorced elderly women, the poverty rate is a scary 21 percent.
Here are a few tips to making sure that you are prepared for retirement, even if you leave your job to become a stay-at-home mom or to tend to an ailing family member. It’s our way of celebrating Women’s History Month.
- Reduce your credit card debt. High interest loans or debts can wipe out a retirement fund, so reducing yours will help. You may want to consider a debt management program if you have a lot of debt and it’s become unmanageable.
- Join your employer’s retirement plan if possible, and contribute as much as is allowed. Many 401k plans offer a match program, which is essentially free money. Make sure you understand your benefit rights, and what may happen if you change jobs or withdraw early.
- Contribute to an IRA. President Obama has rolled out a plan, the MyRA, a simple starter retirement plan that will be beneficial to you if your employer doesn’t offer a 401k option. If you are not working, you can consider a spousal IRA and contribute to a shared retirement account.
- Track your Social Security earnings. If you are working and paying your Social Security taxes, you’re earning a credit towards monthly income at retirement. There are a number of benefits, including disability payments, death benefits, and family benefits.
- Prepare for the possibility that you may end up living alone. With half of U.S. marriages ending in divorce, and the fact that women tend to outlive men, it’s important to protect yourself from this possibility. Make sure your name is on all family accounts and assets, in case something happens to your spouse. Understand your entitlement to your spouse’s retirement benefit if you divorce or if your spouse passes away.
If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.