Women, here’s how to save more for retirement — or you’ll live to regret it

Women live longer than men and, sadly, still earn less than men for performing the same jobs; and it’s worse for Black women, who are paid less than white men and white women.

Obviously long life expectancy can be celebrated. But here’s the major issue with both of these factors. More women end up underprepared for retirement when compared to men, and in the case of lower-income women and single mothers, poverty in retirement can be the result.

Ladies, what this means — and hot-off-the-presses data proves it — is that you might not be saving enough for your future.

#gulp

Likely, a long time ago some financial expert told you to start saving 10 per cent of your pay for retirement. So you’ve worked exceptionally hard to do just this.

However, to fully prepare for a much longer life (getting longer due to brilliant medical advances), one in which we don’t rely fully on government retirement programs and can keep up with the rising costs of living, we need to think bigger ... think 15 to 20 per cent of your pay going toward savings for retirement.

#doublegulp

It’s a lot, I know. But, here are a few ways to save a bit more, and achieve better financial results overall.

Get a plan and get help

There is a high statistical probability that no one taught you this financial stuff, and that’s OK. Let’s remedy that right now. Women who have a written financial plan are twice as likely to achieve their retirement goals, and the best plans are guided by financial professionals and reinforced with ongoing financial literacy, not just DIY’d.

Hire a pro to help you, and consider giving your business to a woman adviser. In my experience, thinking much past five years can be a bit too far to map out. Start planning by identifying personal, financial and professional goals for the next five years plus pricetags for each of these goals. Then you and your adviser can build retirement savings strategies for that time period (could be a combination of RRSPs, work pensions and TFSAs) to support these goals. A great plan, and adviser, will outline exactly what needs to be done, even on the investing side of things, to get you ready for retirement.

Use a budget and reconcile spending

Before you build a budget, chew on this important fact. Financially secure women ALWAYS pay themselves first, then they pay everything else. Your budget can be built the same way, too. Earmark savings for your RRSP and TFSA off the top of your paycheque, and then allocate the rest to bills and fun purchases too, like takeout and new fitness gear.

One of the biggest mistakes I see being made is not comparing actual spending to what was planned; this is the accountability portion of budgeting, the part that tells you if you’re on or off track. Check on your spending at least once per week and course-correct if you’re spending too much, which means trimming back. Cut out all unnecessary spending, especially on things that don’t bring you joy, and renegotiate all your fixed and variable costs to ensure you’re getting the best value for your money. Despite what you’ve seen on “Sex and the City” and “Shopaholic,” going over budget is no laughing matter. It can cost you your retirement readiness!

Grow your retirement savings over time

Maybe you’re one of those lucky gals who has a high disposable income and can start saving 15 to 20 per cent for retirement right away. Adjust your automated RRSP, TFSA and pension contributions accordingly to hit this benchmark.

If you’re not so fortunate, you might be starting to save from scratch. Catch up steadily by automating regular contributions to your retirement savings plans on payday, and then try to increase this amount, even by a small percentage, every three months (the approximate length of time it often takes to adjust and form new better budgeting habits). As you trim your spending, saving more gets much easier!

Make more money

Women are actually great at making more money, when we make it a priority. The additional income can be used to close the gap between what you’re saving today and that 15 to 20 per cent savings target. The low-hanging fruit here is simply leveraging free money through employer-matching retirement savings programs or utilizing available tax credits. Step this up with a “side hustle,” leveraging your skills to make more money. A great example of this is teaching online photography classes as well as holding down a regular job.

Most importantly, women need to stand up for their salary and advocate for themselves to get raises and promotions; similar to their male counterparts. And here’s the scoop on loyalty. If you’re underpaid by more than 15 to 20 per cent relative to the market, but have been with your employer a while, you need to seriously consider leaving your job for a better paying job with comparable benefits. Your future is WAY too important to be hampered by a below-market paycheque.

The only way to build financial security as a woman is to keep as much of what’s been earned as possible. So don’t overspend, pay cash for purchases and pay credit-card balances in full and on time each month, and do what you can to save more every year in the most tax-advantaged way possible.

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star.