(Article 2 of 3)
There’s an old adage that goes “women retire, men die.” Unfortunately, that old adage may be getting an update because of some alarming trends that recently surfaced in a national study by Leading Retirement Solutions. LRS’ 2017 study found that a large percentage of women business leaders and owners are unnecessarily putting their retirement at risk due to inconsistent saving habits. In our first article, we saw how a staggering 67% of the female population in the U.S. are ill-prepared for retirement, and moreover, women business owners are not that far behind with a meager 50% admittedly prepared for retirement, while the other half are consumed with reinvesting profits and even their own savings back into their businesses, leaving little if anything for retirement.
The study also revealed that even though only 23% of women business leaders have a written retirement plan, 90% are making contributions to a retirement plan account to at least some degree. So, the good news is that women business leaders are actively seeking financial independence. The unfortunate news is that even though a modest amount of contributions to your retirement plan now will help in your retirement, you may still find yourself working well into your golden years when half of your working peers have long retired to the beaches of the Caribbean. I’m sure you’ll get a postcard though, “Wish you were here!” The disparity gap of women business owners, half already on the golden brick, secure path to retirement and the other half that went off trail somewhere and got lost in the woods, appears largely to come down to inconsistent saving habits.
To get you back on the right path (and join your colleagues) to financial independence, there a few simple strategies you can use:
1) Start saving and contributing now! Even though you’re busy running your business and it may be hard to imagine putting any of your needed business capital aside, for your own retirement savings, a simple conversation with your retirement plan provider will help you get started and ultimately reach your goals. Avoid an all or nothing mindset because saving or contributing even a little is better than not saving or contributing at all. That beach in the Caribbean might be closer than you think.
2) Building your savings and retirement plan holdings creates business capital. There are a number of ways you can tap into your retirement savings, in a tax-free manner, for additional short and long term business capital that you may need from time to time. Build up your personal and retirement plan savings creates potential operating capital for your business needs.
3) Increase what you save and contribute. Aim higher in the amount you save whether it be seeing aside more money in a savings account or making large contributions to your company retirement plan. Also work to reduce debt in your personal and professional life. Debt is an ugly factory that puts your green little employees (money) to work for someone else, instead, put them to work for you through contributing to your retirement plan.
4) Contribute more frequently to your savings account(s) and your company retirement plan. Work with your retirement plan provider and utilize payroll to increase the frequency of your retirement plan contributions. A higher frequency contribution can dissipate the effect that a larger lump sum contribution can make on your daily life.
5) Ask for more. As a business leader, revaluate your pricing strategy and operational costs to meet your needs. Furthermore, consider that an owner’s contribution should be considered a company expense that is covered by revenue.
To get back on the right path to retirement, sometimes it’s just a few simple steps in the right direction. You’ll be amazed at just how quickly you will spot that golden brick path your peers are already on, and then before you know it you will be sending others a post card and working hard towards a perfect tan.
Watch out for the last posting in this three-part series where we will dive into the next result that emerged from LRS’ study and learn how to avoid the pitfalls of poor retirement planning. Or if you can’t wait you can access the full study performed by Leading Retirement Solutions here.