7 Ways Women Can Confidently Grow Your Retirement Savings
While women are more likely than their male colleagues to participate in employer-sponsored retirement programs, women often contribute less.
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According to a T. Rowe Price study, women contributed less because they earned less money than men and were less likely to hire a financial advisor to help them grow their retirement savings.
“Retirement doesn’t have to be a daunting task,” said Judi Leahy, senior wealth advisor, Citi Personal Wealth Management. “When you take the time to plan, you can prepare for unexpected costs and better manage your debt. Working with a financial advisor to discuss meeting both your immediate and long-term financial goals can help ease the stress of planning for retirement.”
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GOBankingRates spoke to Leahy about the seven ways women can confidently grow their retirement savings.
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Create an Investment Policy Statement
Start by creating an investment policy statement, which is a document that outlines general rules and guidelines for managing your portfolio.
“Set clear target savings and try to avoid knee-jerk reactions that would cause you to deviate from those targets,” Leahy said. “Remember that the more time you spend saving for retirement, even if that amount is small at first, it is still a step forward in setting yourself up for success.”
Understand Your Portfolio
If you’re new to investing, learn about your portfolio and the various asset categories you can incorporate, such as stocks, bonds and cash.
“Try to maintain a healthy mix of each of these and diversify your assets to help achieve your goals,” Leahy said. “The performance of these assets varies over time, so diversifying your investments can help reduce the risk level in your portfolio.”
In addition, diversifying your portfolio and making smart investments will help you create long-term, sustained wealth for many years ahead.
“Investing retirement accounts — as well as a taxable brokerage account, can offer greater flexibility with how you use your money and maximize on savings,” Leahy said.
Allow Your Investments to Grow
Ensuring you allow enough time for your investments to grow is also key to effectively balancing and allocating your portfolio.
“There are different phases to consider when building a balanced portfolio, which typically includes the planning phase, the accumulation phase, the distribution phase and the legacy phase,” Leahy said.
She also recommended allowing at least a full market cycle (generally three to five years) to participate in equities – money that is invested in a company by purchasing shares.
Leahy explained, “Set your target allocation – allocating for profit and loss – and rebalance your asset allocation at least annually, depending on the size of the portfolio.”
Plan for the Unexpected
Many people plan for retirement as if the rest of their lives will be spent sailing in smooth waters, and they forget to incorporate unexpected events such as inflation and rising healthcare costs.
“It’s important to incorporate cost-of-living increases into both your fixed expenses and discretionary spending plans to account for price increases in food, clothing, energy and health care costs,” Leahy said. “You may be in retirement for 20 to 30 years, so you need to account for the fluctuation in costs of goods and services.”
Re-engage Strategically
Women have returned to the workforce in record numbers since the pandemic. A Moody’s analysis revealed that nearly 78% of women are participating in the U.S. workforce.
Leahy recommends that women who are entering the workforce after a career break re-engage with the workforce strategically, maximize contributions to retirement accounts, and consider catch-up contribution options.
“This is also an important time to review spending habits and explore potential part-time or flexible work options to gradually build back savings,” she said. “A financial advisor can work with you to create a personalized plan that fits your situation and future goals.”
Schedule Regular Check-Ins
Having regular check-ins with a financial advisor can answer questions and ensure you’re on the right track to grow your retirement savings.
“Financial advisors can help you understand how much you can comfortably put into your retirement savings based on your risk tolerance and other life milestones you’re saving for,” Leahy said.
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This article originally appeared on GOBankingRates.com: 7 Ways Women Can Confidently Grow Your Retirement Savings