In his best-seller Men Are from Mars, Women Are from Venus, John Gray talks about men “going to their caves.” Yet in financial planning, both genders often retreat from difficult situations and decisions. This harms financial futures – especially women’s.
On average, women live longer, which matters when saving and investing. In 2012, the Institute for Health Metrics and Evaluation found that men live an average of 76.2 years, compared with 81.3 years for women.
This means the average woman’s retirement savings needs to outlast that of her male peers by five years.
How can women address this gap? Women need to save more, start saving earlier and invest more aggressively early in life.
Generally, women tend toward less investment risk than men. Taking on lower risk may lead to lower average rates of return on women’s long-term investments and therefore women may need to save even more for retirement. Here are some tips:
Put yourself first. Sometimes women spend more time first helping others financially. Examples include:
• Saving for children’s college costs rather than for her own retirement (conventional financial wisdom holds that saving for your retirement comes before saving for a child’s higher education)
• Financially supporting her parents, children or grandchildren
• Spending time out of the workforce to care for children, grandchildren or elderly parents.
Often, women out of the workforce don’t save and invest. Worse, they may live off savings at an age when they need to invest money for the future.
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