An article from the Smart401k Women’s Series
During the month of May, Smart401k will place extra emphasis on women and investing. One element of our Women’s Series will be a set of blog articles that highlight women’s opinions, challenges, interests and unique situations with investment, budgeting and general finance. We will meet three women who are in different phases of life with distinctive financial situations. Amy is in her 20s with a successful career and an independent lifestyle. She has been cognizant of remaining within her budget, and she actually has faced challenges because of her prudence. Shannon is a married mother of two who is more than 15 years into her career. She grew up in a single-mother household. Ellen is a mother of grown children who is preparing to retire this year from a full career. She also is in the midst of a divorce.
Ellen has worked hard her whole life. Her mother died when Ellen was nine, and she took on the household cooking and cleaning duties. At 16, she started working at as a grocery cashier – a position she held through the time she graduated from college. Ellen taught math for 33 years, taking nine years away while her sons were young. She served as department chair in two schools, and most recently Ellen has been a math coach and math subject chair. Ultimately she decided to retire at the end of this school-year because she plans to buy half of her house from her soon-to-be-ex-husband as part of their divorce, and she said the house will require a lot of upkeep. But there is no rest for the weary, as Ellen intends to find a part-time job soon.
Retiring
At this point in her life, she said she thinks about her retirement situation almost every day. Ellen faces unique retirement planning challenges, with a nearly-finalized divorce in the works: she spent her life assuming that she would share retirement income and expenses with her husband. Ellen will now need to live on a very tight budget with a fixed income. And she believes she might need to sell her house.
She will receive a teacher pension, which most states provide to teachers, but she regrets that she never participated in a 403(b) or 457 plan –these plans are similar to a 401(k) but are available to employees of 501(c)(3) non-profit organizations like public schools.
Decisions made long ago have caught up with Ellen. She never formalized a retirement strategy. And though she thought about retirement beginning in her 40s, Ellen always assumed her teacher pension would provide plenty of income. She did not investigate the costs of retirement compared with her projected income.
Though Ellen did not express regret about the decision, she also placed her sons’ college educations much higher on her financial priority list than her own retirement – a behavior many financial experts advise against.
“Our sons’ education was paramount. We paid for their tuition and room and board, so we did not save any money for about nine years,” Ellen said.
For basic budgetary needs, Ellen said her monthly pension income will be sufficient. To cover emergencies Ellen has a small savings. She did make a budget, which she said is an estimate at this point. But she did say it will have to be continually revised until she gets a fix on her expenses. She is cutting out unnecessary expenses, and Ellen said items she currently feels are ‘necessary’ expenses might also need to be cut.
“I will do what is necessary to live within my means. I am making decisions that will influence my financial future for the rest of my life. I will have to live with my decisions,” Ellen said.
Lessons women can learn from Ellen’s life
- Create a financial plan and review it each year
- Spend time using financial calculators and projection tools to determine the amount of money you will need in retirement; Smart401k members have access to Retirement Outlook for planning.
- Take advantage of the retirement saving plans you employer offers
- Make your retirement a top savings priority – equal to or above your children’s educational savings
More to come …
Look for more about Ellen during the month of May. Her views about and experiences with investment and retirement planning will appear in other May blog articles.
About Smart401k
Smart401k is a Web-based investment adviser providing unbiased advice to help employees invest in their employer-sponsored retirement plans. Smart401k provides service to almost 11,000 clients who collectively have more than $1.5 billion in assets. Individuals receive personalized investment recommendations based on the funds in their plan and support of professional investment advisers available to answer all investment questions. Based in Overland Park, KS, Smart401k can be found at Smart401k.com.
