Invest Retirement

The 10 Best Ways Women Can Make Our Money Last In Retirement

Kathryn Tuggle  |  January 15, 2019

We’re going to live longer and make less over our lifetimes — it’s time to talk strategy about making our money last.

We women don’t have it easy when it comes to retirement. We stand to live an average of five years longer than men, yet we make 84 cents on every dollar that a male colleague makes. It’s no surprise, then, that the majority of us—60 percent—are worried we’ll run out of money money if we live to 100, according to the Merrill Lynch’s recent Women & Financial Wellness study. Unfortunately, our fears are well-founded. Over the course of our careers, women stand to earn $1.1 million less than men. Take a minute and let that figure sink in. Whether we like it or not, we’ve all been tasked with doing more with less. So, what are the best ways to ensure our retirement savings work harder and last longer? We checked in with experts to find out.

Negotiate the Highest Salary We Possibly Can

“One of the things that we’ve seen is that your starting salary is critically important,”  says Anne Ackerley, head of BlackRock’s U.S. & Canada Defined Contribution group. “Women should focus a lot on what their salaries are in the early days of their careers, because the impact of compounding interest is tremendous over time.”

Don’t take the first figure offered if you think it’s too low. Negotiate as much as you can, and go into any negotiations educated on averages for your position, Ackerley says.

Take on More Risk

“We’ve seen that women tend to invest more conservatively, but when you’re making less and living longer, you have to take on more risk,” Ackerley says. Many employer-sponsored 401(k) programs will place people into “target date” funds, which target a retirement date and therefore take on more risk early in the life of the investor. “If you get put into one of these target date funds, stay there,” she says. (Of course, take the advice of your financial planner, who should know your full financial picture, into account always.)

Build Your Financial Confidence

When you’re getting a handle on your financial future, remember that no question is a dumb question. You should find a financial planner who always makes you feel that you’re in a safe zone, explains Tammy Butts, executive vice president at AXA Advisors. “Even if you feel like you have a good grasp on your personal finances, there is always room to learn more and build even more confidence,” she says. Butts recommends reading books, having frequent discussions with your partner and always knowing what your game plan will be for the years ahead.

Save As Much As You Can

Given the pay gap and women’s longevity, we need to save at least 1.5 times as much as men do in order to ensure we’re prepared for the future, Ackerley says. “Try to put as much aside as you can, early in your career, because then you’ll have the impact of compound interest. The more you save as a young woman, the less likely it will be that you’ll need to work longer.”

With that said, working longer is a valuable strategy, but it’s often easier said than done.  Nearly half of retirees — 48 percent — left the workplace sooner than they’d planned, due to health problems, job loss or other circumstances beyond their control, according to a study by the Employee Benefit Research Institute.

When you’re getting a handle on your financial future, remember that no question is a dumb question.

Limit Your Time Out of the Workforce

We know this one might not always be possible, but staying in the workforce can make a big difference in your retirement account’s bottom line at the end of your career. “We know that the burden usually falls on women for caretaking, but this hurts you a lot in terms of savings,” Ackerley says. “You’re not only missing out on earning a salary, you’re missing out on getting your employer contribution to your 401(k).”

Be Willing to Seek Advice

Websites, family, friends, financial planners, books — leave no stone unturned, Ackerley says. “Your financial future isn’t something that you can guess about. I’m always surprised how much people don’t realize about retirement, and how easy it would be for them to get a handle on it if they just sat down and asked a few questions.”

Know What You Have and Where It Is

You’d think that everyone knows right offhand where all the assets they’ve accumulated over the years are, but these things can get lost, Butts says. “Young people move and change jobs frequently, women may change their names, and it may be that you didn’t get your statements, and the company wasn’t able to track you down, and you forgot. Make a list of everything you have now and everything you had from previous employers. Where are the gaps?” she says.

Know What You Need, and Pay Yourself First

Get your arms around what risks you need to take in order to reach your goals, then figure out a game plan for exactly how to get there, Butts says. “This means discussing what financial freedom means to you and then assessing current and future spending.” Above all, remember to pay yourself first (meaning, put money aside for retirement first) before you do anything else with your money. “Unfortunately, what people don’t save, they tend to spend, and that’s a habit they need to get out of,” Butts says.  

Plan for the Unexpected

In other words, have an emergency fund. Most Americans don’t have enough money to cover even a $1,000 emergency, which is a frightening statistic that’s all too real. Set aside three to six months of living expenses in a liquid account that is not linked to your ATM or debit card. Even if you start with just $25 per pay period, start somewhere and make it a habit.

Watch Debt

Credit cards are the fastest way to a downward financial spiral, Butts cautions. “Think long and hard before you buy anything with credit that you can’t pay off,” she says. “I always recommend making a quick scan of your basked at the checkout stand to determine if you really need an item. Debt is like quicksand — it can pull you under before you know it, and disrupt all your financial plans.

Know You’re Not Alone

We’re in this with you. Join the judgment-free zone of like-minded ladies today: the HerMoney private Facebook group.

Editor’s note: We maintain a strict editorial policy and a judgment-free zone for our community, and we also strive to remain transparent in everything we do. Posts may contain references and links to products from our partners. Learn more about how we make money.

Next Article: