Home Education Here’s how young women decide how much to put off to retire

Here’s how young women decide how much to put off to retire

Here’s how young women decide how much to put off to retire

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When it comes to retirement planning, the earlier is usually better, but according to financial experts, several factors affect how much young women put off.

In order to plan for retirement, a demographic group called “younger women” may include Generation Zer, Millennials and some Generation X from 20 and over before leaving the workforce, said Certified Financial Planner from New York Laceta Braxton , co-founder and co-CEO. of 2050 Wealth Partners and a member of CNBC Board of Financial Advisers.

But despite the age difference between these women, experts may offer them several generations of financial advice to create wealth.

“A lot of people want to start by saving money for retirement,” Braxton said. “But it really depends on what you earn and how you spend it.”

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She said young women should focus on earning what they deserve given the intersection of gender and racial pay gaps to assess income potential. She then proposes to “fill the buckets,” referring to categories such as retirement savings, pillow fund, and brokerage account.

While the first goal of retirement savings should be to make a sufficient contribution to your 401 (k) or 403 (b) workplace plan to get a full match employersyou can aim to achieve your own annual deferral limit for such plans she said is $ 20,500 for 2022.

It is estimated that 12% of employees have fulfilled the maximum 401 (k) plans in 2020, according to Vanguard. But “it’s really cash flow and goal oriented,” Braxton said.

It’s really cash flow and goals.

Braxton Laser

Co-founder and CEO of 2050 Wealth Partners

Its clients also focus on a “cushion account” of 6 to 12 months of spending cash on emergencies or other priorities such as career change or starting a business because “the younger generation wants flexibility”.

Another bucket could include Roth’s individual retirement account, a smart option to maximize in low-income years, with a $ 6,000 limit for 2022, she said.

And taxable brokerage accounts offer extra versatility without a penalty for using money under the age of 59½.

On average, young women who are determined between the ages of 18 and 35 start investing in a brokerage account at the age of 21, compared to 30 for women 36 and older. according to Fidelity.

Braxton loves to see progress in all the buckets, and she selects customer percentages for each.

Major life milestones, such as entrepreneurship, marriage, childbirth, or caring for older relatives, can also affect how much young women save.

Lorraine Williams, CFP of Dallas, founder of Worth Winning and a member of CNBC Board of Financial Adviserssaid her clients often juggle multiple priorities.

“I do everything by talking,” she said. “And I think landmarks play a role in generally understanding where we need to be.”

For example, someone may temporarily reduce retirement savings to pay for infertility treatment or start a business. However, you may need to increase your savings in the future to achieve your original goals.

“It’s putting all the options on the table and then letting the client make a decision,” Williams said. “But the realization that there is no right or wrong answer to achieving it.”

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