My Top Money Tips For Women Over 50
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For as long as we’ve all been alive, money has been considered a taboo subject, especially for women. But in recent years, overdue conversations about financial well-being are finally being had, and female financial experts are stepping up to the plate to make sure we’re informed and educated about money. For women over 50, finances are especially important, as we’re faced with decisions about retirement, long-term care, and more. In this week’s blog post, I’m dishing out some of my top tips for becoming a financially fit woman, with help from Shannon McLay, founder of The Financial Gym.
1. Build up your emergency fund.
Throughout our 20s, 30s, and 40s, we’re told to contribute as much as we can to our retirement accounts…and for good reason! But now that we’re in our 50s and 60s, it’s even more important to reinforce our emergency funds. This is our “oh shit” money—money you can turn to if you’re unexpectedly let go from your job, a major accident happens, or you incur another unanticipated large cost. Ideally, the goal is to set aside three to six months worth of living expenses (think rent, groceries, health insurance, etc.), but every bit counts. The goal is to save it and not touch it—that way if something comes up out of nowhere, you’re prepared.
2. Pay off your credit card debt ASAP.
The interest rates on credit cards are honestly criminal. Credit card companies take advantage of people—they give high credit limits and allow people to spend beyond their means, and then saddle them with interest rates between 15 and 25%, or even as high as 36%. At that point, they may as well rob you. I cannot stress enough how important it is to pay off your credit card debt as soon as possible. Many people think they should wait until their emergency funds are higher or they’ve accumulated more savings, but trust me THE BEST TIME IS NOW. The longer you wait, the more interest you’ll accumulate, and trust me, whatever rate you’re saving at will not beat out your credit card interest rate. You’ll merely be saving to pay the interest, and you’ll still be behind. Bottom line: Pay it off as soon as you possibly can.
3. Max out your retirement contributions, and start thinking about what retirement looks like for you.
After your emergency fund and your credit card debt are squared away, it’s time to max out your retirement funds. It used to be that once you turned 70 ½, you couldn’t contribute to your 401k (or other retirement fund) anymore. Now, there’s no age limit. Woohoo!
And according to Shannon, most women over 50 are not putting enough into their retirement accounts. “You may be close to retirement, but your retirement accounts will need to fund you for the next 20 to 30 years,” she says, “so your investment horizon is not 10 years or less, like you may think. You want to make sure you have enough to support your lifestyle in retirement.”
The goal for retirement is to contribute as much as you can as soon as you can, even if it’s not a lot. Time is your friend with investing, and the sooner you invest, the more time that money has to compound. Every dollar counts!
With regards to planning, many people find it helpful to envision their retirement lifestyle. What do you want to do? Where do you want to live? How much money do you need to do that? It’s time to get realistic and enthusiastic about how you’re going to spend your retirement years. This will motivate you to save more in the interim. “Visualizing goals, naming them, and naming related savings accounts is a powerful strategy to help accomplish those goals,” Shannon says.
4. Revisit your investments and life insurance plans.
When’s the last time you met with your financial advisor, or sought out guidance with investing? Chances are, you’re overdue. The investments we make earlier in life aren’t always the ones we should make in the latter half of our lives, and it’s important to make sure your investments align with your current financial situation and lifestyle, especially if you are no longer working. This isn’t to say you should become overly conservative—you still want your money to grow after all—but you don’t have as much time to recover if something goes poorly, so it’s best to seek guidance from your advisor.
In a similar vein, what about your life insurance? Is the plan you’re paying into still a good fit for you and your family? This is another question to bring up to your financial advisor. Your needs and your family’s needs may have changed since you chose your current life insurance plan, and if that’s the case, it’s worth considering an adjustment. You may not need to be paying as much as you are, and that money could be better allocated elsewhere.
5. Consider what your long-term plan is in terms of your estate and care.
Finally, the toughest one: thinking about your long-term care and your estate. I know this is extremely difficult for most people to think about, but it’s better to be prepared for the long-term than to spare your thoughts and feelings in the short-term. At this juncture, I advise every woman to meet with their estate attorney to make sure their finances are taken care of, especially your will, power of attorney, and beneficiary designations for all of your accounts and assets. Also, it’s time to think about your long-term care. If you end up needing assistance to live your daily life, what do you want that to look like? Would you prefer an assisted living community, or an at-home caregiver? What will that cost you? Depending on your answer, it could be worth looking into long-term care insurance.
Above all, the best advice I can give you is to set clear goals for yourself with regards to your finances. As Shannon puts it, we should all take the time to list and visualize our goals. “Goals are the designations for our life roadtrip, and most of us are driving around without those goals everyday,” she says. “That’s why we may feel lost or not confident in our financial life.”
For more financial advice, I highly recommend checking out the below podcasts, and joining the Pure Joy Squad, where you’ll find a badass, supportive community of women over 50 dealing with the same issues you are. Click here to sign up now!
My favorite financial podcasts:
Xo,
Renata