Finding the time to devote to saving should be front of mind and not a chore, says financial expert
If your calendar is like most, it’s pretty full; juggling work, family and friends, maintaining a home, paying the bills. Your retirement savings are the last thing you have time for.
New Zealand Retirement Commissioner says women tend to reach retirement with a lot less money than men. And a recent Australian study shows about 90 per cent of women will retire with inadequate savings to fund their retirement.
Mercer financial adviser Helen Angwin says it is paramount all people, regardless of gender or age, understand and manage their own finances to prepare for future needs. And, it all starts with budgeting and knowing the value of a dollar.
“Cash flow is the cornerstone of wealth creation so set yourself a budget; you need to have surplus income to start saving,” she says. “Recreational spending is OK but things like travel, cars, electronic goods, clothing and dining out should be kept in check. Don’t splurge.”
Angwin says income is just as important as budgeting and women in particular need to ensure they receive pay commensurate with their position when building their career and setting ongoing savings targets.
“Too many women accept lower pay relative to their male counterparts,” she says. “Be assertive and request pay commensurate with your position. When you do get a pay rise, consider it as an opportunity to save more. We get used to living on the same level of income so a pay rise can be used to divert to savings.”
Her top tip for a savings plan is to start small with a set, achievable target. Salary sacrificing small amounts of your pay throughout your working life is second on the list to help build your retirement savings.
“Achievable goals will give you positive reinforcement when you actually get there, whereas onerous savings targets will lead to disenchantment and mean you do not follow through with saving,” she says. “Start salary sacrificing $1,000 a year – about $20 a week – and build this slowly over time. It is the tortoise who wins the retirement race, not the hare.”
As for the big ticket item in life – buying a home – always consult experts for the best financial deal, and be disciplined in saving for the deposit and paying off the mortgage. Flatmates, she says, are one way to help repay the mortgage sooner. A person should be just as disciplined in selling a bricks and mortar asset, especially when negotiating a property settlement.
“If you are negotiating a property settlement in a divorce, seek financial advice,” Helen says. “Women are often inclined to take the life style assets, such as the home or car and maintenance payments, rather than investment assets like shares and investment properties.
“In the long term this can lead to lower returns and circumscribed situations.”
Finally, Angwin says, women need to make time now to ensure a stable financial future.
“Put time aside each week to engage with and understand your finances; educate yourself about tax, retirement savings plans and investments,” she says. “It’s not hard to take responsibility for your own finances, but it does require a bit of your time.”