Setting up a retirement strategy can be one of the more daunting tasks out there for most executives. Being a woman can present an array of additional challenges due to factors such as the “wage gap” and possible long breaks during a career to focus on family.
Below we’ll look at some strategies to address these specific concerns that female executives may face when creating their retirement plan.
Financial Knowledge Is Power
Regardless of your formal education and what degrees you may have earned, it’s very likely that you never learned the intricacies of retirement planning.
This overlooked yet crucial bit of learning can often mean the difference between a comfortable retirement and one full of compromises.
Even if you plan on using a financial advisor or other professional to help with your retirement planning, having the knowledge yourself to understand key elements and strategies will pay huge dividends.
The good news is that you have time to learn, so there’s no stress or need to try to cram as if it were a final exam. Planning for retirement is a marathon, not a sprint. Think of it in terms of decades. So slowly building your knowledge over time is an easy and stress-free way to take control of your future.
Dealing With Gender Wage Gap Issues
Female executives may have had to deal with wage gap issues at some point in their career, and may even be currently experiencing this.
Of course, the less you earn, the more challenging retirement planning can be. The most direct way of addressing this issue is simply asking for a salary increase if you think it is warranted. This can be through your current employer or by looking for a new, more lucrative position.
The current job market is very much in the favor of professionals and executives. Companies are competing with each other to find and secure the best talent from a shrinking pool.
This means that many have increased their compensation packages. So if you’ve been at your employer for an extended period of time, you may not realize you’re being underpaid compared to the current market.
Research positions similar to your own on recruiting sites. If your pay has fallen behind, consider asking for a raise or begin to look elsewhere for a better compensation package more in line with today’s business climate.
Create A Tax-Friendly Retirement Plan
Not all retirement strategies are equal, and often it comes down to tax liabilities when determining the best options.
You’ll want to seek out both tax-exempt and tax-deferred options when setting up your retirement.
There are key differences between the two. Tax-deferred accounts refer to lower taxable incomes where you pay taxes later when you withdraw funds during retirement. Some common examples are:
- Traditional IRA
- 401(K)
Tax-exempt accounts mean the withdrawals are tax-free, you pay the taxes up front and pay no tax when you withdraw funds during retirement. Common examples of tax-exempt accounts are:
- Roth IRA
- Roth 401(K)
Minimizing your tax liability can greatly influence your retirement goals, so this may be one of the most crucial planning steps you should consider along your path to retirement security.
Consider Passive Income Investments For Retirement
For women who may have entered or reentered the workforce late due to raising a family, they may have lost crucial wealth-building time.
However, there are still great options to supplement your wages and this includes passive incomes. Things such as rental properties, stock dividends, or online sales can all be great passive income streams.
If you’re a female executive with skills and experience that you’ve built up over the years, consider creating a digital e-book or online mentorship course to help teach other women what you’ve learned.
Online sales like these can become a source of passive income that help supplement any lost wages due to time away from your career. Passing along your knowledge and mentoring can also be incredibly rewarding.
Female Executive Retirement Planning
So while women may face specific challenges when dealing with retirement planning, there are strategies to help even the playing field. Arming yourself with the right knowledge will give you the tools needed to overcome these obstacles and create the optimum retirement plan.
If you have $1 million or more in investable assets, please contact ICC Wealth Management for retirement planning advice designed for female executives and professionals.
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