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How can women maximize their retirement savings?
Researches reveal the fact that men are in better financial condition than women at retirement. Though about 50% of women contribute to the workforce in present times, yet they usually earn less in comparison to what men earn. One of the major reasons behind this phenomenon may be that the women have to take time out of the office in order to take care of their children and aging parents. However, there are certain ways by which women can maximize their retirement savings.
Read on to know how you can maximize your savings at retirement in spite of being a woman.
Estimate how much you require
The first thing you need to do in order to maximize your retirement savings is to estimate how much you require to maintain your lifestyle at retirement. It has been found that women usually don’t calculate how much they would require after retirement. While estimating, consider your investments and savings as well. After working out with the figures, focus on increasing your retirement savings instead of planning only for how to cover your expenses every month after retirement.
Contribute more to your 401(k)
It is advisable that you be aggressive to save for retirement when you’re young. It will help you save a substantial amount at retirement as you can save more when you’re young. Your responsibilities tend to increase as you get married and have children. You should at least try to increase your contribution to your employer sponsored 401(k) plan in order to capture your company match.
Another important thing to maximize your retirement savings is to avoid early withdrawals. Take out money from your 401(k) retirement plan when there are no other options left for you to overcome your financial emergency. This is because if you withdraw from your 401(k) before you’re 59 ½ years of age, then you may have to give 10% penalty on the amount withdrawn along with the tax that is due.
Diversify and rebalance your investment portfolio
To maximize your retirement savings, you should try to diversify your investment portfolio and also rebalance it from time to time, if required. You need to invest in a retirement plan along with stocks and bonds. This will minimize your risks and increase your profit. If required, you should also rebalance your portfolio. This is necessary as you need to reconsider your investments with the changes in the market. For example, if you’ve invested more on bonds in comparison to stocks as you expected the former to give you more returns, then you can rebalance your portfolio once a year by investing more on stocks if it expects to yield higher return.
You can also opt for automatic rebalancing if your company is offering this option. By doing so, your plan manager gets the authority to rebalance your investment portfolio as and when required.
You can also maximize your savings at retirement by working for a relatively longer period of time. As per a research conducted by the Center for Retirement Research at Boston College, if you delay your retirement by 3 years, then you can increase your retirement nest egg by about one-third more than what you can save if you retire at the age of 62. So, if possible, delay your retirement age and maximize your nest egg as much as possible.