To the Women of America: Retire on Your Own Terms

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If you are a woman in America, there is a high likelihood you have limited retirement savings. According to Prudential Financial’s recent Financial Wellness Census, women and men on average expect to retire at age 67. But women have saved an average of $115,000 compared with $203,000 for men and nearly half (46 percent) of women said they have no retirement savings.

There are real and systemic reasons women save 43 percent less for retirement than men. For starters, there’s less money. Women who are working full-time still, on average, earn only $0.79 for every dollar men earn. Still others are part of the 78 percent of single parent households headed by mothers, making saving for anything, particularly something as future-focused as retirement, a struggle.

But as a financial therapist, I also see other choices that women make that often compound these structural disadvantages. For example, many women put off preparing for their financial future until they sort out other plans for their future, such as partnering or starting a family. Others anticipate allowing (or currently allow) their partner to manage their financial responsibilities on their behalf. Psychotherapist and author Annette Lieberman outlined various “money phobias” which she saw as common and predictable constellations of behavioral symptoms affecting women in their financial lives in her book The Money Mirror. “Money Denying” women as she called them want someone or something, such as an institution to take care of them, and see financial care-taking as a form of emotional rescue. This view dovetails neatly with certain traditional societal expectations, which suggest that exercising power and direction over your money is inherently anti-feminine.

Many women approach their personal finances with a greater wariness and fear than is typical for men. We’re afraid to make a mistake, or we feel anxious about our existing level of knowledge. These emotional roadblocks can keep us from getting started and allowing ourselves the opportunity to learn from experience. Interestingly, once we do get started, our investment performance tends to exceed men’s, primarily because our caution makes us less impetuous.

  • We need to reframe this confidence gap that keeps women from stepping up to the plate and reaching our full financial wellness potential. We need to actually see it as an advantage or even a virtue. It’s OK to not be overconfident about something.
  • Embrace the learning process. There’s nothing magical about preparing for retirement, and no one — no matter how much they position themselves as an expert — knows what the future will bring. This means that mistakes, an even an occasional loss, can be part of the learning process. It doesn’t mean you are “bad” at this.

Whatever your situation, it is possible to build new habits that enable a positive outlook on retirement. Here are a few tips for getting started:

  • Get oriented. Do a review of what you have saved and/or invested and where it resides. This baseline knowledge will give you the power to make smart decisions moving forward. If you are brand new to retirement saving, begin by talking to your HR department about sponsored employee plans like a 401(k) or 403(b), or if you don’t have access to a workplace retirement benefit, consider opening a independent retirement account (IRA).
  • Put saving first in your cash flow plan. Too often people plan to save what is “left over” in their paycheck, but then there is nothing left. Pick a modest amount and make an automatic transfer to your investment account, or set a (pre-tax!) deduction to your 401(k).
  • Make it social. Connect with a community of peers who are also working toward retirement to receive support and develop accountability. Just be careful about following anyone’s prescriptive tips. You need to evaluate the right roadmap for you, not just copy someone else’s.
  • Use Resources You Can Rely On:There are a variety of resources available to help guide your financial journey. Using services such as LINK by Prudential can personalize your experience to not only learn about what’s important to you, but also connect you with solutions and financial professionals to help you achieve your goals.
  • Dont go changing too fast. You may choose to adjust your spending or change your lifestyle to prioritize saving or investing more, but that’s not where I recommend people start. Attempting too much change too quickly can we set ourselves up for failure. Focus on the simple, manageable tasks first: get oriented, make small savings automatic, and then increase that amount with time.

Ultimately retirement planning success is about balancing today’s needs with tomorrow’s needs. You can’t halt pleasurable spending, hoping you’ll enjoy all your savings “someday.” But ignoring your future self by putting nothing toward retirement is not a viable option. Both versions of yourself deserve to be taken care of – and you have the power to do it!

LINK by Prudential is an umbrella marketing name for Prudential Customer Solutions LLC, an SEC-registered investment adviser, Prudential Annuities Distributors, Inc. and various subsidiaries of The Prudential Insurance Company of America.

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