Start with the basics
On the first day of a new fitness plan, it is inadvisable to bench press 100 lbs or run 10 miles. A better path is to start small, lifting 10 lbs or running 1 mile, and build up to bigger things.
Having a solid understanding of how much you are spending now will help you estimate how much you will need later in life. If you are working, Hannon suggests not only taking advantage of your employer’s 401(k) or equivalent plan, but investing enough to receive a full company match if possible. “Consider that free money,” she says.
For women seeking to further their financial education, Hannon points to a wealth of resources in print and online, including “The Charles Schwab Guide to Finances After 50” by Carrie Schwab-Pomerantz, “Women’s Worth: Finding Your Financial Confidence” by certified financial planner Eleanor Blayney, as well as smartaboutmoney.org, a program of the National Endowment for Financial Education and wiserwomen.org, the website of the Women’s Institute for a Secure Retirement. Women over 50 can also find retirement and financial planning advice on Next Avenue’s website. Those who have the time and funds could also enroll in a personal finance course at their local community college or consider hiring a financial adviser.
Do not fear the financial adviser.
Less than half of the women surveyed in the above mentioned Fidelity study felt confident talking to a professional financial adviser about money and investments. “It’s not like you need gobs of money to get someone to work with you,” says Hannon, who thinks a financial adviser or certified financial planner can be a valuable resource, especially for older women, who may not be as comfortable navigating financial planning resources online. Hannon recommends connecting with a professional through the databases of the National Association of Personal Financial Advisors, the Financial Planning Association or the Certified Financial Planner Board of Standards.
Take care of yourself first.
“Women often do put other people’s needs in front of their own,” argues Hannon, who observes that many women play the role of caregiver either to children or aging parents. But she emphasizes that taking care of your own needs is an integral part of financial fitness.
“If you have a choice between your kid’s college fund and your retirement fund, do your retirement fund,” she says. While many feel obligated to pay for their children’s education, Hannon stresses that this is not a requirement. There are many options out there for children to pay their own way through school, and they will have many more years to pay off their debt than you will to rebuild your nest egg. Also, if you do not have adequate funds saved for your retirement, the burden is ultimately shifted to your children, when they must care for you later in life. Along those lines, estate planning is part of retirement planning, and experts recommend investing in long-term care insurance. (But not all experts agree on the benefits of long-term care insurance.)
Talk it out
Why is it women are more comfortable talking about sex than money? Financial experts believe that failing to talk about your finances with your spouse or significant other “shows a lack of trust in the underpinnings of a relationship.”
“Build your (investment) portfolios as a team,” they advise, “it is kind of fun when you have a partner to do stuff with,” and that way both parties share in the weight of major financial decisions.
Experts also encourage women not to keep the discussion of financial matters between themselves and their significant others. They suggest starting a book club with your lady friends to read and discuss books about investing and managing money.
Along side a 401(k), independent savings and Social Security benefits, a part-time job is part of many women’s retirement plans — 49 percent of women plan to work after retirement, a recent survey found. Experts in personal finance view these four factors as “the four pillars of retirement.” These pillars provide the basis for women’s financial fitness in their 50s and beyond.
Have more questions about financial planning for women in their 50s? Check out Next Avenue’s full series on this topic.