David Bach, the co-founder of AE Wealth Management and author of the best-seller “Smart Women Finish Rich,” says women need to take charge of their investments.
“Most people do have the money to save. They’re just not doing it. A lot of it is habits,” Bach said. “You have to learn from the day you get out of college and you get your first job the first person to get paid is you. You have to be relentless about that.”
According to Bach, the formula is to save at least one hour per day of your income for that nine-to-five job.
“That first hour of your income, whatever it is, goes automatically into your 401k,” he said. “Now that comes out to be 12.5% of your gross income.”
What Bach teaches women is that they need to save 20% more than men do.
“It’s totally unfair, but you have to because you’ll be retired at least a decade, maybe two decades, longer than men are because you live longer.”
Women also need to protect themselves from financial devastation from widowhood and divorces.
“Over the age of 50, if you’re married, you have to say to yourself, ‘If your husband died today what would I do you know about the money tomorrow?’ And the answer is ‘Everything.'”
That means women need to be aware of the life insurance policies, the beneficiaries, the 401k plans, the IRA accounts, and the financial advisors. This knowledge will help them when a spouse dies or if they get divorced.
“Women get crushed financially in a divorce. Women’s incomes go down. Their net worth gets crushed. Men’s incomes go up,” Bach explained. “The first thing that happens if someone goes through a divorce is you fight over the money. You don’t get half of the money if you don’t know where it all is.”
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter. Send tips to firstname.lastname@example.org.