When it comes to savings, the gender savings gap is huge. A recent study1 indicated that women have 50% lower savings than their male counterparts. There are a number of reasons that this disparity exists, among these are that on average women earn lower salaries than their male counterparts and will spend fewer years in the workforce. However, there are actions that women can take right now, that will help improve their savings and provide a bridge to end the gender savings gap.
1) START NOW
The very first step to eliminating the Gender Savings gap is for women of all ages to start saving now. If you are a parent of a young daughter, start saving on her behalf—even if it is coins in a piggy bank. If you are a young woman just starting your career, start saving now—even if it is just a few dollars a week. By the time you are in your 30s, you should be saving 10-15% of your income and the sooner you start, the more quickly you can get to that rate of savings.
2) MAKE CONSISTENT, INCREMENTAL INCREASES
Commit to increasing your rate of savings every year. Increasing the amount you save by just $25/month every year could mean that you will have $5,000 more in retirement savings, and an increase of $150/month2 every year could mean more than $34,000 in savings when you get to retirement.
Check out this image for more ways that incremental increases can make a positive impact on your long-term savings balance.
3) KEEP THINGS BALANCED
Make sure that at least a portion of your savings is in lower-risk products that are not subject to loss from economic or stock market volatility. Fixed Annuities and Fixed Indexed Annuities are insurance products that offer guaranteed3 rates of interest, protect your principle and interest from loss due to market downturns (assuming you don’t make any early withdrawals), and can offer the advantages of tax-deferred savings when part of a retirement plan.
The surest way to make change is to take action. Do something today to help close the gender savings gap for tomorrow.
Check out this other blog post on the savings gap.
1 Women versus men in DC Plans, Vanguard white paper, October 2015.
2 Assumes a 3% rate of return for 15 years before taxes are assessed. This is a hypothetical example for illustrative purposes only – not representative of any particular investment or insurance product.
3 Guarantees are dependent on the claims paying ability of the issuing Company. Because they are meant for long-term accumulation, most annuities have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the annuity. In addition, withdrawals prior to age 59 ½ may be subject to a 10% Federal Tax Penalty. All withdrawals made from annuities with pre-tax contributions are taxed as ordinary income. All withdrawals from an annuity purchased with non-qualified monies are taxable as ordinary income only to the extent there is a gain in the policy. Indexed annuities do not directly participate in any stock or equity investments. This is not a solicitation of any specific annuity contract.