by Andrea McGrath
Last summer I hosted a women and wine series in my office for 3 Tuesday evenings in a row. I invited 25 women to each session. I have thrown events before and they have always been well attended but much to my surprise these were not. I know that Social Security is not the most thrilling subject matter but it is very important to each and every one of us and the more you know now the more prepared you will be later. As I just hit the 50 mark and am certainly past the 75% point of working years left I made the assumption that the women I know would want to know what’s in it for them but that was not necessarily the case.
This observation scares me and inspires me at the same time because I know that small changes that you make now can dictate how you live later and let’s face it, each of us has the potential to live a really long time.
My inspiration for wanting to work with baby boomers and women to help them have what they need and live how they want in retirement comes from my own mother. She was not only a mother of ten, a community volunteer and an involved parishioner, she was the one who managed to run our family on my father’s single income and she could stretch a buck like nobody’s business. We were not wealthy but we did not go without and my mother still managed to steadily and methodically save. She believed in both living for now and saving for later. She always had a few bucks tucked away that she called her “mad money” for just in case she came across a little something for herself. She was a sale shopper and never went to the store without coupons but she also made sure she passed on what she could to help others along. She was forever shipping our outgrown clothes to other mothers she knew. She also always encouraged the women in my family to manage the family finances and have their own money and credit. How she inspired others has inspired me to do the same.
Two things I know to be true are the fact that numbers don’t lie and time passes very quickly. The decisions you make in your 60s will determine how you live in your 70s, 80s and 90s. Especially for women, with lower lifetime earnings, lower pensions and longer lives you must arm yourself with ways to improve your outcomes. Do what needs to be done now so you won’t have regrets of should have, could have or would have later.
For divorcing women this is extremely important. No one gets a raise when they divorce and women that were stay at home moms or left the workforce early to raise a family or care for a parent never re-enter at the same level before they left. Degrees and skills become obsolete when not used and starting over is a lot of work and commitment. Expenses double when households are split into two. Now with the new tax law changes the inability to count alimony as W2 income is not a good thing especially if that is your only income. You may not qualify for loans and you cannot invest in an IRA are just two of the many drawbacks associated with this change. Additional life challenges added to the burden of trying to not only survive but live a purposeful and meaningful life.
Here are just a few things you should consider. Firstly, if you haven’t already you should enroll in your employer sponsored retirement plan. If you are already enrolled then you should increase your contributions whenever you can by however much you can even if it’s only $5 a week. If your employer offers a match then you must contribute enough to get the full match. By contributing less you are sacrificing free money. How much can you really save you ask? At age 50 today if you could save $85 a week with your money earning 5% interest you will have $100,000 in savings at age 65. Saving later than never can still add up!
Another consideration is working longer. I know some people are horrified by that prospect but if you enjoy what you do and it allows you to improve your earnings history and savings capability then you should seriously consider it. Even part time work will help reduce your retirement drawdown period.
Lastly, reduce your debt while you are working. Consider a mortgage that will be retired when you are. Having a large mortgage in retirement can be an enormous burden and drain on your resources.
I know the world we live in today is far more complex than my mother’s generation but that doesn’t mean that what worked then cannot work now. It doesn’t mean that she didn’t face rising costs and the struggles of making ends meet while managing a large and active family. She did, but she still made saving money and paying down debt a priority while still managing to live a full life. In this life, sometimes the more things change, the more things stay the same.