We all have that blissful image of retiring on a remote island, spending our days lounging on the beach and sipping piña coladas. But the reality is that retirement is expensive. And it's not just that island that I'm referring to; I'm talking about critical expenses--healthcare (if you're sick, you'll want access to the best healthcare money can buy), children (if you miss your children, you'll travel around the world sparing nothing to see them)--the list goes on and on. In order to live to your personally defined greatest happiness, you need to be on top of your retirement funds.
Enter your new best friend: a Roth IRA. An IRA is simply a financial vehicle that allows you to effectively save for the future.
If you get in the habit of putting $150 per month into a Roth IRA for the next 45+ years, you could retire with hundreds of thousands of dollars (thanks to the amazing effects of compounding interest)! (Note: this does not take into account inflation.) In my role as CEO of LearnVest, a personal finance hub for women, many users have written to me because they feel like they simply can't spare any extra money from their living expenses (rent, food, transportation, etc.) to put away into savings. My advice to users? It's not so much getting out of the habit of buying that daily cup of coffee as it is getting into the habit of understanding and implementing the correct financial steps that will help you to maintain your own fiscal health.
So if contributing $150 per month to an IRA seems daunting to you, then start small. It's more about creating good habits! Begin by putting aside $20 per month. What's most important is that you're consistent. Even this small amount can help you create a cushion for those days on the beach, and it will help you realize that saving is actually possible. If you wait to do it whenever you feel like you can afford it, then you'll miss out on some of the best investment years of your life!
I can fairly say women have come a long way financially over the last three decades. Today, we make up half of the workforce and are earning the same salaries as everyone else. (My female mentors have amazing stories about years when they got paid less for simply being a woman.) Our average income has soared 63% in the last 30 years. However, according to a 2006 Prudential financial poll, nearly 80% of women say that they plan to depend on Social Security to support them in their golden years. And women are nearly TWICE as likely as men to retire in poverty. On the topic of IRAs, latest reports show that roughly 2/3rds of single women don't even have them! So even today--despite coming so far in many ways--too many women are still ignoring their finances. I was one of them!
What you need to know: when it comes to saving for retirement, starting early REALLY matters. Time and compounding interest are everything to you. The hurdle is to just stop being intimidated by your money, embrace your finances and start learning. If you're capable of hitting the elliptical while reading a book and catching up with a friend with your laundry running (standard Sunday morning, right?), you can definitely set up an IRA.
While I can't give you specific investing advice, I can help you with finding and setting up the retirement account that is right for you. If you want to be walked through the process step-by-step, check out the LearnVest checklist "I Want To Open An IRA" Still feel overwhelmed? Read up on Retirement Basics, including the Dos and Don'ts of retirement savings.
Being rich means different things to different people, so take the time to define your wealth on your own terms. What do you need to be happy? Once you know the answer, understand your finances so you can make it happen.