Even before inflation soared to 7.5 percent in January, longevity was a real risk to women’s retirement savings. With the average life expectancy for females hovering at around 80, living for 20 years or more without a regular paycheck is a distinct possibility. Add inflation to the mix, and it’s not surprising women are worried they’ll outlive their savings.
That was evident in an AARP survey of Americans ages 50-plus conducted late last year. Only 9 percent of women 50 to 64 expressed confidence that they’ll have enough money to live comfortably in retirement. The women who expressed a lack of confidence in their retirement readiness were worried that Social Security and their savings wouldn’t be enough to cover their living expenses. Others were concerned about the state of the economy and pointed to low incomes that made it difficult to save for retirement.
“Even before this skyrocketing inflation hit, women workers were already at risk of not achieving secure retirements,” says Catherine Collinson, CEO and president at Transamerica Center for Retirement Studies. “Women should be concerned about their long-term financial situation and retirement preparations.”
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
Retirement planning is more than deciding how much you’ll contribute to your 401(k). It requires having a clear sense 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. Not sure where to start? Collinson suggests books, the internet, and friends and family as places to learn the fundamentals. “Women may also want to consider seeking the services of a professional financial adviser,” she says.
When designing your financial plan, make sure to account for both fixed and variable expenses, factoring in at least 3 percent inflation over time. Fixed expenses, like your rent or mortgage, should be paid for from guaranteed income, such as Social Security benefits or a pension. Knowing you can cover the most important expenses will give you peace of mind. Revisit your plan annually to make sure you’re still on track.
2. Take advantage of labor shortages
Employers are struggling to fill jobs these days, which presents retirees with 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 curb spending
If you are facing cash flow issues in retirement, identifying ways to trim costs can be a quick and easy solution. Jody D’Agostini, a financial advisor at Equitable Advisors, says to start with the services you are no longer using and canceling them. With the services you do use, make sure to shop around. There are deals and discounts that can help you save on everything from health care to your mobile phone. “Covid helped us to prioritize what is important to us and what we value most. Commit your dollars to these expenses and reduce or eliminate others that you have done without and didn’t miss,” she says.