Who doesn’t want to be a millionaire is probably a better question. However, most people and more specifically most women, probably think that millionaire status is unattainable and just something to daydream about. Many investors see the possibility of becoming a millionaire as something that happens to others and that those individuals probably just got lucky.

While most people have dreams of how they want to live their life in retirement (travel, hobbies, lifestyle), the U.S. Department of Labor reports that less than half of Americans have calculated how much they need to save to get there. With the average American spending about 20 years in retirement, this is a huge oversight in the area of preparing for retirement and having the lifestyle you really want to sustain.

I know the term millionaire carries a lot of interpretations for most people who immediately conjure images of Oprah or Donald Trump. However, becoming a millionaire is actually attainable for many average investors with regular jobs who are willing to create the right habits and are determined to achieve this momentous goal.

Most women realize that they have reason to be concerned about how they will maintain their lifestyle in retirement. According to a 2009 EBRI study, only 12 percent of women are confident they will have enough money to live “comfortably” throughout their retirement years. With 58 percent of female baby boomers having less than $10,000 in retirement, we have every reason to be concerned and it’s no wonder that one million dollars seems like a fairy tale.

Why are many women in this startlingly bleak position when it comes to retirement? Most likely, it’s because life happens and priorities change. I know what it’s like to work full-time while taking on the numerous responsibilities of a wife and mother. Stuff happens and there is always something that seems more immediately important financially than saving for “someday when…” What we need to focus on is communicating how much more difficult it gets to “catch up later.”

Catching up isn’t just a matter of starting to save (eventually), because most of us are not going to save our way to becoming a millionaire. We have to build the habit of saving, but the real juice is going to come from investing those savings in a super solid investment strategy that will get the results we are seeking. When it comes to investing, those early years count even if our contributions are minimal.

Many women might be thinking, “I’ll never be able to do that,” when you talk about saving and investing your way to being a millionaire, but the truth is that many women can accomplish this and it doesn’t even have to hurt all that much!

To put it in perspective, if you contributes ten percent of your income to a 401k, it feels more like seven percent because its tax deferred. Most of us spend seven percent of our income on things we really could live without and I can’t think of anything that will give us more long-term benefit and satisfaction than investing in our future financial security.

Of course, the earlier you start saving and investing, the better; but even if you didn’t get started in your twenties, you have lots of hope for building a sizeable portfolio through good habits and a prudent investment strategy.

For example, if you started contributing $200 per month or $2,400 per year (which is ten percent of $24,000 per year) at age 30 until you turn 65 years-old, you will have invested a total of $84,000 over the time period. That in and of itself is great and a huge accomplishment. Add to that a solid investment strategy at nine percent average rate of return and you could end up with over $592,000! While it’s not quite a million dollars, it is a far cry from the less than $10,000 most baby-boomer women have today. That is what I call success!

What I find so exciting about this conversation is that even an employee who makes a modest $30,000 per year can become a millionaire. Consider this, at ten percent contributions, over forty years, with a ten percent rate of return, someone making $30,000 per year could save and invest their way to $1,460,555! That is amazing! And proof that with the right habits both from a saving and investing perspective, many people actually can become millionaires.

So, dream big… and see how you can build the habits of millionaires.

Sources:
Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2009 Retirement Confidence Survey
www.soundinvesting.org, April 2006

As a woman in the financial industry I find myself frequently frustrated that most of the articles I read about women and money or investing focus on the negative. Is there an income gap? Yes. Do women face challenges when it comes to retirement? Sure. But – HELLO… women are making huge strides in the areas of income and wealth. So instead of focusing on the negatives, let’s focus on what we can do to help women make the best of the financial circumstances they have.

By focusing on what each individual woman can do to make her financial situation the best it can be, we are encouraging females to take responsibility and be proactive about their finances. By improving the lives of the women we work with, we can make a much bigger difference than if we waste energy by focusing on the negative and lamenting the cultural challenges women face.

According to recent data from the IRS, nearly half of all individuals with at least $500,000 in investable assets are women. In addition, nearly 40 percent of the “top wealth holders” (defined as those with assets of at least $625,000) are women. 1.1 million of these women had a net worth of at least $1 million. I find this to be exciting news for all women and what it says about our future.

Every woman is unique, but getting started on the road to financial independence can be managed by most women. No matter if a woman is single and working, married with children, or suddenly single as a result of divorce or death, there is never a bad time to step up and get a grip on your financial situation. Below are some strategies for women of varying financial backgrounds:

• Young, working women. Obviously, younger women have an advantage because their investment time horizon is longer. However, being younger also makes retirement seem like less of a reality and can make it easy to put saving and investing off until “tomorrow.” Younger women in the workforce should enlist in 401(k) options early and create an emergency savings fund that can cover unexpected expenses.
• Married with children. Women who are married with children face a different set of distractions which include a hectic schedule and trying to be all things to all people. For women who stay in the workforce during this time of life, setting aside at least 10 percent of your paycheck will allow your retirement fund to grow substantially. Also, make financial decisions with your husband and work together to meet financial goals for the family. Have realistic expectations on what you both can afford to save and spend.
• Suddenly Single. Considering that 90 percent of all women will be solely responsible for their finances at some point in their lives, all women need to prepare for the possibility of becoming surprisingly single. The days of deferring to the man in our lives to take care of the “complicated” part of the finances or the investments need to be retired. All women need to be prepared to face financial challenges alone at some point. Work with an investment coach to create a financial roadmap that can help keep you on track with financial decisions.
• Late Bloomer, Baby Boomer investor. A 2006 study sites that 58 percent of baby boomer women have less than $10,000 in retirement. While this is a stunning statistic, it doesn’t mean that there is no hope for these women – when it comes to saving and investing, every day and every dollar counts.  Take action, plan ahead and enlist strategies such as maximizing your 401(k) and creating a solid budget that can help get you on better financial plan to saving.

Building financial confidence starts first with building your knowledge, then building good habits to support your goals. Every woman can do this by first learning about the impact saving and investing can have on her future. Then putting habits in place that support the goals that they want to achieve.

It’s never too early or too late to take control of your financial future. Financial confidence looks fabulous on every woman!

This article was originally published on the Women Advisors Forum

Sources:

Insured Retirement Institute, Women and Retirement, From Need to Opportunity: Engaging this Growing and Powerful Investor Segment

Soundinvesting.org, April 2006

I’m told that this is the color shoe to have this summer. Love!