10 Ways Women Can Maximize Their Net Worth by Retirement Age
Written by
Gabrielle Olya
Edited by
Gary Dudak
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Women may want to focus on growing their wealth for a number of reasons. According to a recent survey conducted by Edelman Financial Engines, the top reasons women want to build wealth are to be financially secure enough to not have to worry about money (82%), to be able to have a comfortable retirement (75%), and to have the freedom and flexibility to do the things they want to do (71%). Whatever your personal motivations may be, there are steps you can take to maximize your net worth during your working years.
In this “Financially Savvy Female” column, we’re chatting with Kelli Smith and Rose Niang, directors of financial planning at Edelman Financial Engines, about the best ways women can maximize their net worth by retirement age.
Start as Early as Possible
The earlier you start saving for the future, the easier it will be to reach your goals.
“Start saving — and planning — early!” Smith said. “The impact of compounded growth on early savings is profound.”
Be Consistent About Saving for Retirement
When retirement seems far away, it’s easy to want to utilize money you should be saving for the long-term for short-term goals instead — but this will cost you in the end.
“Always keep an eye on the goal of retirement and be careful not to let competing priorities interfere with retirement savings,” Smith said.
Pay Attention to Your Spending
Track your dollars coming in and going out to ensure you are staying on track with your goals.
“Incoming dollars are limited, so be intentional with where you put each one,” Smith said. “A budget can be empowering.”
Build an Emergency Savings Fund
“Build emergency savings to avoid using high-interest credit cards when problems pop up,” Smith said.
This will also ensure you don’t tap into retirement savings to cover these expenses.
Look for Ways To Increase Your Income
“Be willing to find a side gig or second job,” Smith said. “This mindset can help when times are tough, or be a great way to boost savings in the good times.”
Max Out Your Retirement Savings Plan Contributions
“Maximize your workplace retirement plan and/or IRA savings,” Niang said. “Participate in your retirement plan at work to the maximum extent you are permitted on a pretax basis.”
The 401(k) contribution limit is $23,000 for 2024, while the IRA limit is $7,000. If you’re 50 years or older, you should also take advantage of additional “catch-up” contributions, Niang said.
“You can also consider combining your retirement accounts to potentially simplify your investment strategy and get a clearer view of your total retirement assets,” she added.
Delay Taking Social Security If Possible
“Unless your health or other circumstances prevent you from doing so, work full time to at least your full retirement age and take Social Security no earlier than full retirement age,” Niang said. “Waiting longer can be even more beneficial.”
For the maximum Social Security benefit, delay collecting until age 70.
Stay Involved
No matter what your marital status, it’s important to be involved in your financial planning.
“If you’re married, schedule meetings with your spouse three to four times a year to review the status of your bank, investment and retirement accounts; outstanding debts (mortgage, auto, student loans and credit cards); and monthly expenses,” Niang said. “If you’re single, schedule similar check-ins with your financial planner.”
Look Into Long-Term Care Insurance
Purchasing long-term care insurance now can save you big time when you actually need the care.
“Women tend to live longer,” Niang said. “Making sure you have [mitigated] some of the risk of needing care long-term protects your assets and makes sure you are not a burden on your loved ones.”
Work With a Professional
“The best thing women can do is to rely on a trusted financial professional — a fiduciary who is free of commission-based product conflicts — that will have their best interest in mind,” Niang said. “Seek out someone who is used to working with people that have similar circumstances. Make sure to be involved in selecting a financial professional and build your own relationship. Don’t leave it solely up to your spouse or partner.”
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