Forget Botox, rejuvenating cream, or gym membership. If women are to age well, they need a retirement plan, and they need to write it down. Today's International Women’s Day may be just the nudge you need to put pen to paper!
Career breaks, part-time working, and the gender pay gap all make it difficult for women to save enough for retirement. But research shows that putting together a written retirement plan makes you much savvier about the need to plan financially for retirement.
"Writing down your plan helps clarify dreams, define goals, and anticipate bumps along the way," explains Mike Mansfield, Manager Retirement Research at the Aegon Center for Longevity and Retirement (ACLR). "It's something that can be difficult the first time around, but gets easier, and builds confidence if you keep it up to date."
Retirement planning awareness
When it comes to awareness about the need to plan financially for retirement, women with a written plan are ahead of the pack. Eighty-seven percent of them are very or somewhat aware, compared to 78 percent of women with an unwritten plan, and 52 percent of those with no plan at all.
Writing down your plan can be a trigger that gets you saving regularly for retirement. "Consciously deciding when you want to retire and what life will look like once you slow down or stop working, gives you a clear goal to work towards," says Mike Mansfield. "Seventy-three percent of women with a written plan say that they are always saving for retirement compared to 45 percent of those with an unwritten plan and just 18 percent of people with no plan at all."
He adds that, "a written retirement plan also brings peace of mind." Women with a written plan are more than twice as likely as those with an unwritten plan and five times as likely as women with no plan at all to say they are very or extremely confident of fully retiring with a lifestyle they consider comfortable. (46 percent, 22 percent, and nine percent respectively).
Six tips to get you started
Just like a session at the gym, putting your retirement plan down on paper is something you're likely to put off until tomorrow. But it's also very satisfying once you've done it.
Make abucket list of your retirement goals and aspirations. Think big and put everything on the list to start. Decide on your priorities, what is realistic, and what is not. Revisit the list frequently and talk about it with friends and family. Sharing a goal can really help build your commitment to saving for it!
Assign a cost to the things that are on your bucket list. Think about where and how you would like to live as well as your goals and aspirations.
Figure out where you currently are. Calculate how much you have saved already and see how much you need to reach your goals. Make a monthly budget to see how much extra you can save based on your income and planned expenses. Set yourself some short and medium term savings goals to help get you on track.
Think about sacrifices you are willing to make now and in the future. Are you prepared to save more now to reach your goals? Is moving or downsizing an option to manage expenses in the future? Are you prepared to work longer to reach your goals? Are there things you can trim from your bucket list?
Consult a trusted adviser. It is always good to check your plan with a trusted adviser to make sure that you are not forgetting anything and that your assumptions are realistic.
Become a habitual saver! Now that you have a plan, get into the habit of saving on a consistent basis. Saving is like working out, it is hard at the start but the long term benefits are worth the effort.