I wouldn't say I was surprised to learn that according to a recent report, women are less prepared than men for retirement. We know women live longer than men (about three years on average), that women still don't make as much as men and that women – more than men – are moving in and out of the workforce to take care of children.
But what was surprising is that women start saving later – two to four years later than men – even when the wage gap between men and women after high school and college is not as dramatic as it is in later years. Women of America – this is a big mistake. Just consider the numbers.
If you were to invest $1,000 a year (that's just $20 a week) from age 25 to 35, you could turn your $10,000 investment into $168,000 by the time you are 65. But if you wait until you're 35 and save $1,000 a year from 35 to 65, you'd likely end up with $125,000 – $43,000 less than what you would have had if you started saving earlier.
I can preach because I made the mistake myself. In my 20's, it took me a few years before I started investing in my company's 401(k). I could barely afford to pay the bills. How could I put away much for retirement? Then, after I got my first job as a reporter and had to take a 50 percent pay cut, I cashed out my 401(k) which meant paying nearly 40 percent in taxes and penalties on the few thousand dollars I had saved. Not a smart move. Had I only started regularly saving for retirement in my 20's and never cashing out, I'd be in better shape for retirement. But thankfully for myself and for any of you reading this blog and worrying about your golden years, it's never too late to start saving.
Consider the case of one of the amazing women you'll meet in tonight's story on The CBS Evening News with Katie Couric. Michelle Sullivan loved to shop, so much that she accumulated 40 credit cards – that's right 40 cards – and found herself with $30,000 in credit card debt. The 48-year-old mother of four didn't think about retirement until three years ago, when she and her husband divorced. Suddenly, she had to think about supporting herself, taking care of four children and saving for retirement.
Sullivan started attending workshops titled "Smart Women and Money" sponsored by a group called Women's Voices of Georgia. (http://mvgeorgia.org/programs/smart-women-money/) Vickie Elisa is the group's president. "We know that 65 percent of the women in the U.S. who are over the age of 65 face some severe challenges when it comes to retirement," she said. "Many live in poverty. And it's because of decisions that were made when they were young or information they didn't have."
After attending Elisa's workshops, Sullivan learned to cut back on the little things, such as getting her nails done and eating out, make a monthly budget and consolidate her credit card debt at a lower interest rate. In two years, she paid off nearly all of that $30,000 credit card debt, bought a home and opened up a retirement account.
"I educated myself," Sullivan said. "That's the most important thing to get education and that's what got me my home, that's what got me my car, I learned how to save.
Besides starting early, there are plenty of things you can do to make sure you are as prepared as men for your golden years. Beth Kobliner, author of the book, "Get a Financial Life," passed along some great tips which we included below. Also, check out the Women's Institute for a Secure Retirement site which is chock full of practical advice.
So start saving. You will be grateful you did when you retire.
Tips from Beth Kobliner, author of "Get A Financial Life:"