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- Saving for retirement can be difficult for women due to lower wages and time spent outside the labor market.
- To avoid being unprepared for retirement, women should start saving for retirement in their 20s.
- Start saving early, get out of debt and create multiple streams of income.
Research shows this women make up 80% they are more likely than men to live in poverty in retirement.
Stacey Tisdalefinancial behavior expert who has been using her platform to educate her audience about their complicated relationship with money for 20 years – including a six-year study on the factors that influence financial behavior – wants to change that.
“Women may find themselves unprepared for retirement due to student loans, time off work, and lack of multiple sources of income,” Tisdale told Business Insider.
In her opinion, if women start saving as early as possible, already at the age of 20, they will be better prepared for retirement.
Tisdale gave me three steps women can take now to build their retirement plans.
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1. Save often and start early
“It’s important for women to start saving money for retirement as early as possible,” Tisdale told Business Insider. “Women often leave work for a period of time to care for their family or children. “If you can start contributing to your retirement savings early on, ideally in your 20s, those years won’t impact you as much when it comes to saving for retirement,” Tisdale said.
When you start investing at a young age, you give your money time to grow. Because retirement accounts are invested, every dollar earns money compound interest — which means that even small amounts saved early in life can turn into large balances over time.
2. Get out of debt, especially student debt
“Right now we’re seeing retirees, people in their 60s and 70s, who are still paying off their student loans,” Tisdale said. “This can really make a difference in how much money you can set aside for retirement. “When you think about your monthly student loan payment, which could be $1,000, that’s $1,000 a month that won’t go towards your needs and expenses in retirement.”
Paying off your student loan may take some time, but it’s worth it in the long run. The best thing you can do is retire debt-free. “As you get older, your earnings may not increase at the same rate as when you were younger, you may experience unforeseen health problems, and overall life becomes more expensive. If you have debt that you can get rid of sooner, do it now, Tisdale said.
3. Create multiple streams of income
“It’s often said that you can’t become a millionaire by working alone from 9 to 5,” Tisdale said. “The same goes for retirement. Having a well-funded retirement will take more than just… 401(k) for most people, but since women generally earn less than men and spend time working, this is especially true for women.”
She continued: “Create multiple streams of income, start a business. It would be great if you could make money in your sleep. Starting a business will require an investment of time and money, but once it’s up and running and generating income enough for you to save for retirement, it will be one of the best moves you can make.”
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