3 Ways Women Can Derail Their Retirement Plan: A List of What Not To Do

3 Ways Women Can Derail Their Retirement Plan: A List of What Not To Do

Planning for your financial future can sometimes feel like an overwhelming task. Because there is so much to consider, it may feel better to just focus on your daily tasks and tell yourself you’ll worry about it later.

Instead of focusing on the long list of retirement planning ideas you were going to check into, it may be easier to focus on some of the things you know you should NOT be doing when it comes to your retirement plan. I’ve created a short list below for you to take a look at. Making sure you follow the “what not to do” list will make it easier to start looking at your future retirement plans with more confidence.

Three things NOT to do when it comes to your retirement plan

1. Putting Off Saving

In the saving game time is money. The more you start saving early the less you have to worry about later. Sounds easy right? Well I understand that it’s not as simple as it sounds. There are always things that come up. I’ll save more for retirement once that credit card is paid off, or when I get my next raise, or after we get back from vacation. Sound familiar?

One of the main reasons for a shortfall in retirement savings for most women is the fact that it’s hard to save for retirement when you have no idea what you should be saving! According to a study released by Transamerica Center for Retirement Studies shows that only 8% of women in the survey have actually completed calculations to estimate their retirement savings needs. And of those 8% only half where done by a qualified financial professional.

You need to have a basic idea of what percentage you should be saving for retirement based off of your current income, expenses and future needs. Once you have a basic idea you can plan accordingly. If you can’t commit the amount that is recommended you at least have a target to work towards.  A good rule of thumb is to be able to save between 15% - 20% of your income. Of course the longer you wait to get started the more you’ll have to save.

2. Underestimating the Probability of an Unfortunate Event

That’s right – I said it. Too many times I’ve seen women completely depleted (financially and emotionally) from significant and unfortunate events that have transpired. Bumps along the road to retirement are to be expected but many women have claimed their plans have been completely derailed by things like major medical bills, providing care for family members (including kids that didn’t leave the nest as expected), bouts of unemployment, or divorce.  While it’s not fun to talk about, bad things often happen to good people.

It’s important to consider these alternate realities and at least simulate what steps you might need to take if something happened. What adjustments would you need to make if the worst-case scenario actually played out? Sometimes just completing this exercise can give you clarity about what is and is not possible. Keep in mind completing these exercises are not intended to scare you to the point that you never spend another dime because you’re waiting for something bad to happen – nobody wants to live like that. But it is important to open your eyes to possibility and have a clue of what might need to happen if things don’t quite go according to plan.

3. Trying to figure it all out on your own

According to the Employee Benefits Research Institute only one in five workers and only 25% of retirees report they have obtained investment or financial planning advice from a profession financial advisor.

There is a lot of information out there to sift through and too many people don’t understand investment strategies, tax strategies or retirement income maximization tools and strategies. Professionals should be sharing ideas with you to explore an optimal set of solutions that is unique to your specific situations, beliefs and ideas about what your retirement should look like. Hiring a professional to help you is one way to help combat the risks of making financial decisions solely based of emotion instead of fact. It’s important to enlist the help of a comprehensive financial planner (not an investment or insurance sales person, not the talking heads on the major business news networks and not the guy that sits in the cubical next to you) to help you work through the options and ideas around YOUR retirement picture.  

Financial planning and investment advisory services offered through Castlebar Asset Management, LLC a registered investment adviser. 

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