Holt’s annual salary fluctuates between $48,000 and $55,000, this is a great way for her to invest as there is no minimum amount she has to contribute to qualify
PREPARE FOR THE UNEXPECTED
Long-term healthcare and disability protection is the No. 1 goal single women like Holt should be planning for. “There must be proper savings and protection in place [in case your] income is disrupted,” Taylor says.
Taylor and Kathleen Williams, a financial advisor and president of Williams Financial Services Group in Oklahoma City, also advise women to save at least three months’ worth of living expenses for an emergency reserve fund in case they are temporarily out of work. “I ask my clients to get it done within a two-year period,” Williams says. The money should not be put in a savings account or credit union, she adds, because it would be too easily accessible. Disability insurance is a good idea considering that one out of five people use it during their lifetime, according to Williams. “It takes a long time for Social Security to pay you for long-term disability and you may not qualify,” she says. While the amount of coverage depends on the income, Summers says policies generally pay up to $5,000 each month. Young women should get policies to cover 60% — 65% of their salaries.
SET YOUR GOALS
As soon as a woman enters the workforce, she should make a list of specific goals she wants to achieve and begin seeing a financial advisor to help her achieve them, says Williams. Holt has a few things that she wants to accomplish within the next two years. Aside from establishing an emergency reserve fund, she wants to get out of loan debt, buy a home, and begin a retirement fund. Williams suggests that she double up on loan payments and avoid additional debt. Women who are also interested in buying homes, she says, should set aside 10% to 20% of their income each month to save for a down payment.
Saving for retirement is the No. 2 goal, Williams says. Female retirees often receive only half of the pension benefits of men due to pay disparity. Many women between ages 60 and 65 live in poverty. “It’s a result of not saving when they were younger,” she says. “Single women live for the day and never learn to take care of themselves because they’re waiting for their knight in shining armor to come. That’s the worst thing they can do.” Saving in a retirement fund as early as possible is the best way to establish and maintain a fund, as well as benefit from compounding interest, she says. There is no set amount to contribute each month, but Williams advises women to put enough away to cover at least 80% of their pre-retirement income.
START INVESTING NOW
Williams recommends investing in mutual funds over stocks because it allows for more diversification when investing on a smaller scale. However, experts advise young women to select various mutual funds based on their risk tolerance.