JThe old adage of the past is better when it comes to retirement planning and saving is still true, but due to the disproportionate economic impacts on working women that the COVID-19 pandemic has brought, retirement planning for younger generations of women looks a little different from the traditional form, reports CNBC.
Age brackets vary, but for women who are at least 20 years old before they want to retire, simply saving for retirement is a start, but it’s not all.
The earning potential is almost always lower for women, especially since the pandemic has further widened the gender pay gap. Beyond that, adding other aggravating factors like race means women and racial minorities have to push to earn what they’re worth, according to Lazetta Braxton, co-founder and co-CEO of 2050 Wealth. Partners and a member of CNBC’s Financial Advisor Council.
The first priority should be contributing enough to a job’s 401(k) plan to qualify for the employer’s full matching option, and beyond that to reach the annual deferral limit for these types of plans. According to a report of Vanguard, and this ability to save depends mainly on the amount of money earned and how it should be spent.
Young women save in a variety of ways
Younger clients also build up a “cushion account” that saves them between six months and a year of living expenses so that they are protected in an emergency or in the event of a career change. “Younger generations want flexibility,” Braxton said.
Another difference for younger generations of women (18-35) is that they are much more likely to have opened and invested in a brokerage account at age 21, rather than waiting until age 30. to start investing like many women 36 and older have done.
Overall, offering advice is about balancing where each client is in their retirement journey against their employment and life plans and being able to offer flexibility, especially for younger generations. of women.
“It’s about putting all the options on the table and then letting the customer make the decision,” said Lauryn Willains, CFP, founder of Worth Winning and member of CNBC’s Financial Advisor Council. “But realizing that there is no right or wrong answer to be able to achieve this.”
For more news, insights and strategy, visit the Retirement income channel.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.