When it comes to financial planning, women are likely to face different challenges than men. For one, they earn less than men on average, and they’re more likely to work part-time jobs or take time away from their careers to raise children and care for family. Time off and lower lifetime income means women face unique financial planning challenges.
Here’s a look at some common financial issues women face and strategies to address them.
Less income means less money to devote to savings
On average, women earn just over $0.80 on the dollar compared to men, leaving them with less money available to pursue financial goals, like saving for retirement.
If you work in a job that offers a retirement plan, such as a 401(k), be sure to save as much as you can. The tax advantages of these accounts can help boost your savings potential. If your employer offers matching funds, save at least enough to receive the match, and try to max out your savings if you can. In 2021, employees can save up to $19,500 in their 401(k)s with an additional $6,500 catch-up contribution for those age 50 and older. If you want to save even more, or you do not have access to an employer-sponsored 401(k), consider a traditional or Roth IRA that allows you to save $6,000 per year in tax-advantaged accounts, or $7,000 if you’re over age 50.
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