Tips & advice on getting your finances back on track.
Women are paid less than men, typically 82 cents for every 1 dollar that men make. Women may also choose to take time away from their career to raise a family and are more likely to become a caregiver for another member of the family if the need arises. Women were also disproportionately affected during the pandemic with 1.8 million dropping out of the workforce. The closing of schools and daycare centers didn’t help the situation with the bulk of childcare falling to women, sometimes forcing their hand into stepping down from their jobs. While men can, and do take on these unpaid caregiver roles within the family, it is more common that these roles are filled by women.
Cost of Caregiving
Once a person starts caregiving, there are often conflicting demands of work and care responsibilities. The financial strains for a caregiver can include part-time work, and a decline in promotions and training, which leads to a reduction in savings and retirement funds.
Despite these difficulties, what can women do to shore-up their retirement funds and overall financial stability?
Knowledge is Power
If you don’t know where to start with your finances then educate yourself. There are plenty of free and reputable financial education resources available online. Navicore has its own in-depth financial education library to get you started. YouTube is another great resource full of educational content to watch over your morning coffee. Increasing your financial knowledge doesn’t have to be stressful. Choose to listen to a podcast on your commute or on the treadmill. A consistent effort will have your financial IQ pumped up in no time.
Women live on average, 5 years longer than men. The financial ramifications of living longer is that the longer you live, the more money you need. On top of living longer, statistically men are more likely than women to be saving for retirement (81% vs. 61%).
If you are working and have the benefit of a 401K, max out your contributions. If your employer offers a matching contribution, make sure you deposit at least the required amount to take advantage of their matched amount. This is essentially free money in your retirement account.
Start small and gradually add more contributions throughout your career or make up for lost time by making catch-up contributions. The younger you start contributing to a retirement account the more time it has to grow, taking advantage of the magic of compound interest.
If you’re maxing out your 401K contributions and still have some income that you can save for later, open a Roth IRA. This is an Individual Retirement Account to which you contribute after-tax dollars. While there are no current-year tax benefits, your contributions and earnings can grow tax-free, and you can withdraw them tax- and penalty-free after age 59½ and once the account has been open for five years. A disadvantage of these accounts is that you’re contributing post-tax money, and that’s a bigger hit on your current income. Another drawback is that you must not make a withdrawal before at least five years have passed since your first contribution.
Open a money market account to invest money that you would like to have access to before you reach retirement age. Most money market accounts pay a higher interest rate than regular passbook savings accounts and often include check-writing and debit card privileges. These accounts can be great for keeping your emergency fund in.
Know your Credit Score
Monitoring your credit and keeping an eye on your accounts is a great start to building a solid financial future. You can get a free credit report once a year from annualcreditreport.com and monitor your credit score on apps like Credit Karma and Credit Sesame. Both of these apps provide good information on increasing your credit score in a steady and easily maintainable way.
Nearly 55 percent of the people receiving social security benefits are women. Social Security provides an inflation-protected benefit that lasts as long as you live. Social Security benefits are based on how long you’ve worked, how much you’ve earned, and when you start receiving benefits.
Create a social security account to view your retirement benefit estimates at different ages or dates you want to receive benefits, and view possible benefits for your family.
You may be eligible for other types of benefits based on your situation. For example, if you become a widow, you can get widow’s benefits if you are age 60 or older; or as a spouse, you are potentially eligible for benefits on both your own and your spouse’s work record.
If you were married at least 10 years and unmarried when you become eligible for Social Security, you are eligible for Social Security based on your ex’s record. Some women sign divorce decrees relinquishing their rights to Social Security on their ex’s record. Those clauses in divorce decrees are never enforced. Go to Social Security’s ‘Ex Spouse Benefits and You’ page to learn more about your eligibility.
Money management can be hard and sometimes overwhelming. If you can’t pay your bills or your credit card debt is out of control, it’s time to seek help. A credit counseling session with a certified counselor can help put you back on the path to financial success. Maybe all you need is help setting up a budget or perhaps you need help to get control over your debts with a Debt Management Plan. Whatever your financial needs, a certified credit counselor can help. Ask for help if you think you need it, there is no reason to feel overwhelmed and alone in this process. You can schedule a call with a credit counselor here.
Lori Stratford is the Digital Media Manager at Navicore Solutions. She promotes the reach of Navicore’s financial education to the public through social media and blog content.