Recently I got to have a long conversation with Melody Juge. She is the founder and managing director of Life Income Management. Melody has 35 years of experience helping women plan for retirement and create income for life. It was great speaking with her because she is so down to earth and had such simple, practical advice for women. Obviously, men and women need to plan well for retirement but there are special considerations for women. Here are her retirement tips for women!
At the beginning of our conversation Melody shared some of the bad news. I’m just going to make a quick list so we can get to the good news…
Current Status of Women and Finances
- 76% of women are not prepared for retirement and it’s their own fault. (Melody said that’s not me!) 🙂
- Many women have a horrible sense of entitlement and it is crippling their chance at a secure future.
- Women live beyond their means. They just keep buying more and more and more.
- Women have no plan. (Guilty as charged.)
- Women are twice (TWICE!) as likely to retire in poverty.
To be honest, this part of the conversation was more than a little depressing to me. Until just a few years ago I was completely unprepared for retirement. After 21 years of marriage I wasn’t expecting to go through a divorce. Unfortunately, my husband was my retirement plan. Like Melody said, my lack of preparation and having no plan was entirely my own fault! In addition to my own lack of foresight I know at least 10 women right now who are coming out of long-term marriages with not only NO plan for retirement but also no idea how or what they are going to do for a living in the present.
Melody also shared with me that in 35 years of financial planning she has met exactly three clients who knew how much it cost them every month to live. She has found that this is because people do not want and are completely unable to confront hidden expenses. She has clients who refuse to plan for retirement because they would rather have a $400 pair of sunglasses than save any money on a regular basis. She has tried to help people who have lost their income but refuse to stop spending $500 a month on beauty products because it’s what they are used to having. Only occasionally does she work with women who are willing to face reality, get a second job, and save their entire earnings so they can build up savings for retirement.
Retirement Tips for Women
It’s all quite fascinating and very common. But it’s also something that can change. Today. Here are Melody’s suggestions for turning things around and getting on the right track financially:
- Set aside a block of time (hours probably) to confront and honestly assess your financial position. Melody likens it to having a root canal without Novocaine. This must be done. You need to know exactly where you money is going. Itemize how you spend money in detail. Are you spending $20 per month on gum? Write it down. $400 per month going out to eat? Write it down.
- Create two expense sheets. One should be just the ‘basics’. Bills, food, electricity, etc. The other expense sheet should be ‘lifestyle’. These are expenses like going out to eat, coffee, getting your nails done. These are not essentials (no matter how you feel about it) and should not go on the basic sheet.
- Now go over each of the sheets and start cutting out everything you can. Be brutal and get rid of everything that is extra from that basic expense sheet. It may take radical cuts like selling a large home and opting for something much smaller. You likely can make do with most of what you already have.
- Keep cutting until you can save (or earn) at least $300 per month. Put that toward an emergency fund first. When you have all of your insurance deductibles saved as well as 3 months of expenses you can start an investment account. Melody suggests a 401K if your employer matches contributions or a Roth IRA with Vanguard. You should probably speak with an advisor on all of this to make sure you are on the right track.
Advice Pertaining to Children
Another good piece of advice from Melody relates to your children. We all want to help our children but you must think of your own retirement first. Most of us simply cannot afford to bankroll our children. You need to let them know that the Bank of Mom is officially closed. This is probably one of the hardest things for me but I have to let my children make their own way so that I can provide for myself as I grow old. This really turns out to be a gift to them in many ways.
Melody’s parting advice to women? You need to take responsibility for your own life, get off your behind, and get to work. Oh, and stop complaining!
On a personal note I would like to say that I agree whole-heartedly with everything Melody shared but it isn’t easy. After my divorce I had to make some hard decisions. Were we going to be able to stay in our beautiful home? The answer was a big fat no. We moved into a much smaller, much older home.
Did I mention how much I like her? Be sure to take a look at her website and contact her if you need advice on planning for your retirement. I can promise you she won’t mince words but she can definitely get you on the right path!