Retirement Planning - 10 Steps To Building Wealth for the Future


American women today are playing financial catch-up - and they're winning. Whether young and starting their first jobs; re-entering the job market; or recently widowed, women are starting to prepare for their financial future. They're learning that if they want to travel the road to financial security, they had better learn to map the trip themselves.

Why is financial independence so important? Unfortunately, many women still leave the financial responsibilities to their husbands, or even worse, face a crisis before they are ready to take the reins, leaving them unprepared to handle their financial affairs.

According the 2009 The Shriver Report: A Woman's Nation Changes Everything1, for the first time half of the all U.S. workers are women. And nearly 4 in 10 mothers (39.3 percent) are primary breadwinners, bringing home the majority of the family's earnings, and nearly two-thirds (62.8 percent) are breadwinners or co-breadwinners, bringing home at least a quarter of the family's earnings. Also according to the Report, women are more likely to graduate from college, yet they earn less than men.

For women, this makes taking control of their financial situation even more essential.

This makes it even more crucial for you to make saving for retirement a high priority, and to make sure that you have enough money to last your entire life. The statistics speak for themselves. According to October 2008 Report from the Center of American Progress, elderly women (over 75 years old) are far more likely to be poor than elderly men (13% of women vs. 6% of men).2 This is why it's important to start planning for the future today.

Unfortunately, many women may not feel properly prepared for the future, financially. Some are employed in settings that don't offer retirement plans to employees. Additionally, women are more likely than men to care for children and elderly or disabled family members. One study found that 69 percent of unpaid caregivers to older adults in the home are women. 2 Because combining unpaid caregiving with paid work can be challenging, women are more likely to work part time or take time out of the workforce to care for family. 2 Twenty-three percent of mothers are out of the workforce compared to just 1 percent of fathers.2 Those career "gaps" can make a big difference in the amount of retirement funds that accumulate over time.

The bottom line is that, although raising children and caring for a family is a tough job, you may end up working even harder later in life to make up for that time.

Following are ten steps that will help you take control of your financial future:

  1. Let knowledge overcome fear. Knowledge is empowerment, the more you learn about preparing for your financial future, the more confident and the more successful you will become. Start by attending seminars on finances, reading books, studying concepts, and attending adult education mini-courses. And don't forget that sites (such as this one) contain a host of financial educational material.
  2. Manage your cash. Get your income and expenses in balance by setting up a workable household budget. Also, put away the credit cards. This will put you in control of your spending and help you identify money you can send ahead for the future.
  3. Find good professionals and work in partnership with them. Nobody has to go it alone. There are professionals who can provide information, insight and recommendations to help you identify and achieve your objectives. The key is objectivity. Find someone who is knowledgeable and with whom you are comfortable. Look for someone who listens and recommends rather than dominates and tells. Remember, it's your money, so final decisions are up to you.
  4. Establish goals. These are blueprints based on your vision of the future: sipping coffee in your beachfront sun room at age 65; watching your children or grandchildren graduate from college debt-free; a trip to Europe. To help achieve these goals, you'll want to start saving as early as you can, and save for as long as you can. Keep your own savings and retirement accounts, even if you are married. Once you know what you want, you can begin to plan what it will take to achieve your goals. A good professional will work with you to help you quantify your goals and develop a strategy to help achieve them.
  5. Identify your "risk tolerance." This is your comfort zone for investing. It can range from ultra-conservative to highly aggressive. Avoid investments that make you ill-at-ease. Stay within your comfort range. Some professionals call this the "sleep test" - if your investments keep you awake at night, your money is in the wrong place. Work with your professional to determine your current risk profile.
  6. Whether you are married, single and working with a professional, do not abdicate financial responsibility. Make building wealth something you do together. If you are married, remember "there are no guarantees. Your husband could die or leave. Get involved.
  7. Don't shy away from tough choices. Sacrifices you make today can help pay for a solid standard of living tomorrow. Consider allocating a portion of your income - many professionals recommend between 5% and 10% of your take-home pay - for the future. What to do: Consider paying yourself first. When you write checks to pay your monthly bills, write a check to your chosen accumulation vehicles or, if available, payroll deduction.
  8. Take your time. Invest a little at a time to get your feet wet. This creates experience and confidence.
  9. Protect your value with disability3 and life insurance. "Do you feel your life is as valuable as a man's? More to the point, if you died, what would be the impact on your loved ones? Whether you are a homemaker or your household's sole support, your death or disability could have a tremendous financial impact on your family.
  10. Pass it on. If you have a daughter or son, educate her about money, so the next generation can avoid the frustrations you may be experiencing.

Many people - both men and women - find preparing for their financial future boring. Learning about it and then practicing what you learn can take discipline. However, the knowledge you gain and apply is one of those must-do things that is well worth the time.

1The Shriver Report: A Woman's Nation Changes Everything, Study by Maria Shriver and Center for American Progress, October 2009.

2The Straight Facts on Women in Poverty, Center for American Progress, October 2008.

3Products available through one or more carriers not affiliated with New York Life, dependent on carrier authorization and product availability in your state or locality.

This material is being provided for informational purposes only. Neither EMA Financial and Insurance Services nor its agents provide legal, tax or accounting advice. Please contact your own advisors for legal, tax and accounting advice.


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