Even before inflation hit 7.5% in January, longevity was a real risk to women’s retirement savings. With the average life expectancy for women hovering around 80, living for 20 or more years without regular pay is a distinct possibility. Add inflation to the mix, and it’s no wonder women are worried about outliving their savings.
This was evident in an AARP survey of Americans over the age of 50 conducted late last year. Only 9% of women aged 50 to 64 said they had enough money to live comfortably in retirement. Women who expressed a lack of confidence in their preparation for retirement feared that Social Security and their savings would not be enough to cover their living expenses. Others worried about the state of the economy and pointed to low incomes making it difficult to save for retirement.
“Even before this inflation spike hit, working women were already at risk of not getting secure retirements,” says Catherine Collinson, CEO and president of the Transamerica Center for Retirement Studies. “Women should be concerned about their long-term financial situation and their preparations for retirement.”
The good news: Even if you have a big shortfall, there are ways to shore up your savings. Here are six ways to do it
1. Create a financial plan
There’s more to retirement planning than deciding how much to contribute to your 401(k). This requires having a clear idea of how much money is coming in and going out. Only then can you identify the risks and create strategies to overcome them. Putting your financial plan on paper can help you stay on track. You do not know where to start ? Collinson suggests books, the internet, friends and family as places to learn the fundamentals. “Women may also consider seeking the services of a professional financial advisor,” she says.
When designing your financial plan, be sure to consider fixed and variable expenses, allowing for at least 3% inflation over time. Fixed expenses, like your rent or mortgage, must be paid from a guaranteed income, like social security benefits or a pension. Knowing that you can cover the biggest expenses will give you peace of mind. Review your plan every year to make sure you’re still on track.
2. Take advantage of labor shortages
Employers are struggling to fill jobs these days, giving retirees opportunities to work and boost their cash flow. Even if you are already employed, you may be able to land a better paying job.
3. Identify ways to reduce expenses
If you’re having cash flow problems in retirement, finding ways to cut costs can be a quick and easy solution. Jody D’Agostini, financial adviser at Equitable Advisors, advises starting with the services you no longer use and canceling them. With the services you use, be sure to shop around. There are deals and discounts that can help you save on everything from healthcare to your cell phone. “Covid has helped us prioritize what’s important to us and what we value the most. Commit your money to those expenses and reduce or eliminate the ones you went without and didn’t miss,” she says .