By Ryan Velez
Saying that saving for retirement when young is a good idea is not gendered specific advice, which may make may the name of this article a bit confusing. However, the need to start saving early is especially pertinent for millennial women due to the numbers surrounding how much money they make. Black Enterprise shares why retirement savings are so important for young women, and where they can start.
A recent research by the National Institute on Retirement shows that overall, women ages 65 and older typically have incomes 25% lower than men. As men and women age, men’s income advantage widens to 44% by age 80 and older. The end result is that women are 80% more likely than men to be impoverished by 65 and older, and between the ages of 75 and 79 were three times more likely to fall below the poverty line.
Jennifer Streaks, a money and lifestyle expert, shares some insight on what young women can do to lay the groundwork to beat the odds later in life, but like many goals, you need to have a clear vision of the end result to be successful. “What type of life would you like to have in your late 50s, 60s, 70s?” says Streaks. “Do you love experiences over things? Do you want to quit, and have the option to do nothing but relax? Do you already have medical expenses, such as eyewear, physical therapy, fitness, or prescriptions that might carry into those years?” Being mindful of some of these potential expenses will guide where and how you save.
One way is start loading your retirement coffers is to have some sort of a side gig. “Look at retirement savings as a pie. There are three slices: investing, personal savings, and income from a small business or side hustle,” Streaks says. “So many millennials are now starting side businesses or becoming entrepreneurs. They’re also not staying at jobs for 10, 15, or 30 years, in order to get a pension or a fund of that nature.” Any sort of part-time work, including freelancing or consulting, can be a sustainable stream of income for you.
Part of planning for the future is taking advantage of the time you have now, especially in terms of investments. “That 10-year window between 25 and 35 is a period where you can be the most aggressive with your investments. You have extra money to invest in stocks, but be aggressive in the stocks you choose,” Streaks says. Also, be sure to ask employers to match your 401k contributions. It may also be a good idea to take on a financial adviser, in order to make sure the risks you do take are calculated.