Women Nearing Retirement Regret Not Saving Sooner — Here’s How They Can Catch Up
Women on the cusp of retirement are facing the devastating reality that they did not start saving early enough. To make matters worse, they are reaching retirement during some of the highest inflation levels the U.S. has seen in decades. With costs on the rise, many women have had to push off retirement or save more.
According to a recent survey conducted by GOBankingRates, 31% of women ages 55 to 64 regret not saving for retirement sooner — in fact, it’s their biggest financial regret. The survey also found that 27% of women over 65 have the same lament.
Here’s a breakdown of the retirement numbers for women, as well as expert tips on how to catch up on retirement savings if you’re behind.
Women Regret Not Building Their Nest Eggs Earlier
Asked their biggest financial regret, 17% of women in the survey listed not starting to save for retirement sooner. That response was right behind credit card debt (19%) and basically tied with not having an emergency fund.
The lag in retirement savings was the most significant concern for those on the Gen X and baby boomer cusp. Additionally, 27% of the respondents in this category were women over 65, already eligible for Social Security benefits. While Gen Xers ages 45 to 54 might be on the younger side, 19% regret not saving earlier.
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By comparison, a mere 13% of 35- to 44-year-olds regret not investing in retirement earlier. Most of the women in that age range were more concerned about emergency funds and credit card debt, but these women likely have been in the workforce for up to two decades, and some already are feeling the strain of not contributing enough to their retirement accounts.
Unsurprisingly, young women were the least likely to have this financial regret, with a low 8% of 18- to 24-year-olds and 7% of those 25-34 regretting not saving earlier.
“The need to save early and adequately for retirement is important for everyone,” said Yanelys Benham, wealth management advisor at TIAA. “However, for women who tend to earn less than men, have 30% less in retirement savings and have a longer life expectancy, the need to begin saving for retirement early in their careers is even more important.”
Financial Literacy May Be the Cause of Unprepared Retirement Funds
There are several reasons that many women delay saving for retirement. However, a major explanation is the lack of financial literacy and transparency women experience.
“For one, no one teaches us about money and personal finance, and I find that lots of women carry shame around this, feeling like they should know more,” said Stephanie McCullough, founder and financial advisor at Sofia Financial. “Many women are lacking in financial confidence, not least because it’s still not considered polite to talk about money. So we end up feeling like we alone are anxious about money and confused by the decisions we are asked to make when in reality there are zillions of us feeling the same way!”
According to McCullough, most of her clients are 45 when they come to her anxious about retirement and looking for where to start. Although it’s best to start early, if you are within the decade of retirement age, it’s not too late.
Behind on Savings? Here’s How To Catch Up
The good news: If you are behind on savings, there are ways you can catch up. Take control of your retirement by following these steps.
Make Saving Easy
You will be much more motivated to save more if saving is a simple and mindless process. Make saving for retirement easy by setting up an automatic 401(k) match with your employer.
“Many employers will match your contributions to some retirement savings plans like 401(k)s and 403(b)s anywhere from 3% to 6%,” Benham said. “Contribute to meet your employer’s match and double your monthly contributions.”
Take Advantage of Catch-Up Contributions
If you are behind on contributions and nearing retirement age, be sure to take advantage of the additional money you are eligible to set aside toward your retirement.
“Individuals aged 50 and older can contribute an additional $7,500 per year in employer-sponsored plans such as a 401(k) or 403(b) or Roth IRA,” Benham said. “That is in addition to the $22,500 allowed for each plan.”
Determine How You Want Your Retirement To Look
If you’re behind on savings, evaluate how much money you need to live comfortably during your retirement so you can get a clear idea of how much you need to save.
“One of the most important and overlooked steps in the process is to get clear on what your personal vision of retirement looks like,” McCullough said. “Most of the women I work with do not want to sit in a rocking chair and watch the world go by for the rest of their lives. They want to remain active and engaged and make a difference. But maybe in a different way than they do now.”
Taking a look at your Social Security eligibility sooner can help you anticipate what your retirement benefits might look like and where you need to fill in the gaps.
“Be more proactive in determining your Social Security benefits,” said Herman (Tommy) Thomson Jr., CFP at Innovative Financial Group. “Even if you’re not ready to claim benefits, go ahead and set up your online account with the SSA. Review your benefits and the different options for you. Knowing the amounts available will help you have a more concrete idea of what you will have — and what you will need to contribute on your own.”
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