Opinion: Young women aren't saving enough while time is still on their side.
I’ve been writing about women and money issues for three decades and the concerns, stumbling blocks, and stark reality of a fragile financial future remain virtually unchanged.“My biggest concern is that women are still lagging their male counterparts men — even millennial women — in retirement savings as well as their income,” Judith Ward, a senior financial planner at T. Rowe Price told me when I spoke to her last week.
But, for Ward, it’s the savings behavior among millennial women that is truly troubling. While retirement is decades away for these women, today’s choices considerably impact their future financial security. The median deferral rate for millennial women was 5% vs. 8% for millennial men. “I was surprised,” Ward says.
Aim to save 15% of salary, including an employer match, Ward advises. “When you’re starting out, you probably can’t do all of that, and that’s OK, you can start at a lower amount, and ramp that up over time,” she says. “The greatest asset you have is time. And that compounded growth can really be magic.”Here’s quick refresher on why saving is nonnegotiable for women:
•The pay gap is alive and well. Women still earn less than their male counterparts. In 2018, women earned 85% of what men earned, according to a Pew Research Center. Similar to past trends, the T. Rowe Price study found that millennial women make less money than their male counterparts—a median annual income almost $30,000 less than the median for men.
Then, too, at some point in retirement, there’s a high probability that women will be managing their money solo, as I write about in my book, “Money Confidence: Really Smart Financial Moves for Newly Single Women.” The T. Rowe Price survey found that within the first 5 to 10 years of retirement, one-third of women were either widowed or divorced, compared with 17% of men.
I soundly agree. We do our homework. We ask for help. We’re very thoughtful when we’re making big decisions. “Women, in general, look to achieve a goal, not just hard-core performance numbers,” Ward says. That perspective “ lends itself to having a more long-term view, so women tend to not have as emotional a response to market volatility.”Get started.
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