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Focus on
Women... Page 2
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Revolving Doors Eat Up Benefits
Changing jobs often can cost you, big time.
On average, women change jobs every four years and seven months, compared with the men's
average of over five years, Patterson said. This is significant in jobs that offer a
traditional "defined benefit" pension plan (one that gives you a specific payout
upon retirement), she noted, because in many cases you'll get nothing from that type of
plan if you leave before you've been at the company for five or 10 years.
"In the worst case, theoretically, a woman could work her whole life and not ever
vest her benefits," she added.
However, if you contribute to a 401(k) or similar plan, the money you contribute and the
interest it earns always belongs to you, no matter how often you change jobs. You can roll
your 401(k) into a new 401(k), or into an IRA, to keep its tax-deferred status. (But
remember, if your employer offers a matching contribution, it will probably vest over a
period of years, so you should be sure to check the rules before you quit.)
On average, women also take more time out of the work force during their careers than men
do - 11 years for women compared with 16 months for men, said Patterson. Again, if you
contribute early to a 401(k), the money can keep working for you even while you're not
earning a salary.
Actively Manage Your Money
Studies have shown that women have different attitudes toward spending and saving than men
do. That's part of the reason Tiffany Bass Bukow said she recently founded MsMoney.com,
one of a number of financial Web sites springing up just for women.
"I ask just about everyone I meet, 'do you manage your money?' And I can't tell you
how many sophisticated women tell me either 'I don't have time' or 'I wouldn't know what
to do, anyway,'" said Bukow.
While men often focus on saving for retirement as a top investing goal, women tend to rank
it lower, behind other goals such as putting kids through college or buying a home, said
Nichols. Women need to realize they should start saving for retirement at the same time
they work on these other goals, because otherwise they probably won't be able to save
enough.
"For women now in their 20s and 30s, retirement planning can be easy and painless,
even if they start saving small amounts," said Patterson. "In later years, it
only gets harder."
Women are often sidetracked by credit card debt, too, feeling they have to pay it off before
they start saving for something else.
Michele Murphy, 31, knows what this is like. She wants to pay off her credit card debt
(which she admits amounts to "a chunk of change") but feels she should also be
investing in the stock market.
"It's a tug-of-war, internally," she said. "Must get out of debt. Must
accumulate savings."
Murphy is doing things right by not forsaking her retirement plan. She worked out a
schedule to pay off her debt over 12-18 months while still contributing to her 403(b).
Once her debt is gone, she'll take that monthly payment and invest it in the stock market.
Another good reason to put money in a 401(k) every month is that it is protected by law
from creditors, even if the owner declares bankruptcy. (A study by a Harvard law
professor, Elizabeth Warren, released last June indicated that women file for bankruptcy
more often than men or married couples. Her study was based on bankruptcy court filings in
eight districts, and showed that 39% were made by women, 28% by men, and 33% by married
couples over a one-year period ending March 31, 1999.)
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