When it comes to being tough, smart and capable, female nurses (and women, in general) have proven they can be all three–and then some. Women are more likely than men to have a college degree1, women outlive men2 and women bring less credit card debt into relationships3.
But despite these powerful tendencies, women get tripped up when it comes to retirement planning.
Nurses Can Tackle Medical Emergencies, So Why Not Finances?
According to a recent survey “Money FIT Nurses Study” by Fidelity Investments, more than half of nurses lack the confidence to make financial decisions4. Given that about 90 percent of nurses are women5, it’s safe to assume that the people without financial grit are mostly female.
Women aren’t scared of money – in fact, 80 percent of household-buying decisions are made by women.6
Women are savvy with getting deals, they price compare, clip coupons and frequent discount websites to save a few dollars. So why do so many women – and nurses, in particular, have a hard time dealing with their financial future?
A Big Problem, With Even Bigger Consequences
The bottom line: there’s no one-size-fits-all answer. For some women, financial decisions might be left to their husbands, while others blindly trust their financial advisers – often too scared to ask questions or be proactive with their money.
For nurses, taking care of financial business can be tricky. Many nurses report not having the time to devote to retirement planning. After all, who wants to sit down in front of a spreadsheet filled with numbers on a day off? Not many people.
But, if you devote some time to understanding your finances, you can change the outcome of your retirement drastically. In short, it’s worth the challenge, because the reward is huge.
Let’s take a look at how you can get a grip on your retirement investments in 5 easy steps.
STEP 1: SET A RETIREMENT AGE GOAL
The first step in retirement planning is knowing when you can retire. The operative word here is “can” because some people may need to work longer due to limited financial resources.
- The earlier you begin saving for your retirement, the better off you’ll be.
As you get closer to retirement age, adjust your exposure to risk.
- If you have more than 30 years until retirement, then you can afford to gamble with riskier retirement vehicles – since you have the time to grow your money.
- Those who are nearing retirement want to focus on safer instruments so that they won’t have a disruptive impact on your savings.
STEP 2: MAKE A BUDGET
A thoughtful budget is your spending blueprint for retirement. Here’s where you’ll figure out how much money you need for:
- Fixed expenses (mortgage, health insurance, car payment, loans)
- Variable expenses (food, gas, entertainment).
Your fixed expenses usually don’t fluctuate from month to month, whereas variable expenses can change.
TIP: Be practical with your budget – don’t underestimate your spending, otherwise you might find yourself in a pickle after you retire.
STEP 3: UNDERSTAND YOUR RATES OF RETURN
If you want to live off your retirement savings, then you have to understand rates of return. Seriously. Although the sound of “rates of return” is enough to put you in a deep sleep, it’s important to get a basic idea of what this means.
- In today’s market, a reasonable rate of return for a 30-year Treasury bond is just 3 percent. This means if you have $1 million invested in bonds, your yield will be about $30,000 per year. 7
STEP 4: SEEK HELP FROM A RETIREMENT INCOME PROFESSIONAL
Now that you’re equipped with the building blocks of your retirement plan, it’s time to talk to a pro. A retirement income professional will help you come up with a sound strategy for executing your retirement plan. Like any other profession, not all are created equal. Some will be proactive and invested in your financial health, while others will operate on autopilot. You don’t want the latter.
What to watch out for in a financial advisor:
- If an advisor promises sky-high returns, a red flag should raise.
- Is your financial advisor a fiduciary? It means he or she has pledged to operate to the highest ethical standards. Much like the nurse’s “Nightingale Pledge,” fiduciaries have a “duty to care” about their clients’ investments, which includes monitoring their financial situation along with investments.
- Finally, you can find out if your adviser has had any rulings against him or her through a simple SEC search. This will take just a few minutes and can save you a lot of time and headache down the road.
STEP 5: DO A YEARLY CHECK-UP
Like your patients, you’ll want to make sure your investments are on track each year. As you get older, it’s smart to check on the following:
- Asset allocations: Are they still on target for your retirement goals?
- Risk analysis: As the seasons change, so does your risk tolerance level. It’s important to assess your risk tolerance yearly, and shape your retirement income strategy accordingly.
- Ensure your beneficiaries are up to date
Keeping track of your retirement accounts is part of your financial health. Even if you have a great financial advisor, ultimately the responsibility is on you to make sure everything is running smoothly and heading toward your goal: a happy and healthy retirement!
1http://blogs.census.gov/2015/10/07/women-now-at-the-head-of-the-class-lead-men-in-college-attainment/?cid=RS23
2http://www.bbc.com/future/story/20151001-why-women-live-longer-than-men
3https://www.nerdwallet.com/blog/credit-cards/debt-and-relationships/
4https://www.fidelity.com/about-fidelity/individual-investing/more-than-half-of-nurses-lack-confidence-in-making-financial-decisions
5http://nurse.org/articles/161/Male-Nurses-And-The-Profession/
6https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/empowering-women.pdf
7http://money.cnn.com/data/bonds/