Most women make this crucial financial retirement mistake

By Retirement PlanningFOXBusiness

Why women need to contribute more into their 401(k)s than men

“Smart Women Finish Rich” author David Bach discusses why women need to contribute more into their 401(k)s.

Over the past 20 years, more women have become the family’s primary breadwinner across the United States. But when it comes to financial management, they face unique challenges.

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The latest data from the Bureau of Labor Statistics showed there were 73.5 million women in the U.S. workforce in 2017, compared to 18.4 million in 1950. Despite taking charge of their financial life, the prospect of living longer than their spouse is creating an unusual gap when it comes to retirement, “Smart Women Finish Rich” author David Bach told FOX Business on Monday.

“The average age of widowhood right now in this country is 59. Eighty percent of men will die married. Eighty percent of women die widowed,” Bach said to Maria Bartiromo on “Morning with Maria.” “So as a woman today what you need to know is this — your retirement is going to be five, 10, maybe 20 years longer than the man in your life. So you have to have more money set aside for retirement.”

However, women still face a gender pay gap. Women now earn about 82 cents for every dollar a man makes, he said, and are also taking an average 11.5 years off from the workforce to raise kids and take care of parents. Because of this, women are potentially losing a million dollars in earnings, in addition to impacting how much they set aside for retirement.

“My message to women across America is this -- you have to save more than the man in your life is saving,” Bach said. “You need to be saving a minimum of 15 percent of your gross income.”

“When you simplify that, it’s one hour a day of your incomes ... unfortunately most women are saving half of that today.”

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Bach said a main reason for this disparity is that children are not learning finance in schools and he is putting the onus on President Trump to address the issue.

“I believe what this president could do to make a serious change across America is create a financial literacy program for kids in school,” he said.

Bach also said that parents can take an initiative to teach their daughters about money before college.

“We have $1.5 trillion in student debt right now — mom, dad, you need to be saying to your daughter, “I want you in charge of your money from Day 1,” he said. “When you control the money, you control your life.”

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