If you haven’t started it yet, then do it today!
By Jan Perkins, Senior Partner, Management Partners
The payroll manager of a city I worked for many years ago had a habit of “convincing” all new employees to sign up for deferred compensation. It didn’t matter if they were a street maintenance worker or the assistant city manager. She did the math for them and showed that the reduction in their paychecks would be minimal, and that over the years, they would build up a nest egg that they would greatly appreciate when they retired. Even if they stayed in the defined benefit retirement program for their entire career, they would find that the extra money from having savings in deferred comp would come in handy someday. It would offset medical costs, pay for vacations, and help out their kids.
Further, she pointed out to them that they might change jobs a lot, yet their deferred comp account would be portable and continue to grow. When she passed away some years later, at her memorial service person after person stood up to give a testimonial to her about how they were grateful she talked them into investing in themselves early in their careers. People talked about how important that money was now that they were retired. There were a few funny stories about how she wouldn’t take “no” for an answer when they said they couldn’t afford to take it out of their pay. She convinced them they just had to do it! And they did.
Retirement planning is different for women. In an article, Five Ways Retirement is Different for Women by Ann Brenoff at the Huffington Post cited some important differences. She noted that (1) women live longer; (2) women are more likely to live alone in their later years; (3) leaving the work force is easy but going back in can be difficult; (4) retired women are poorer than retired men; and (5) part time work rarely leads to a good retirement plan.
For those reasons, it is even more important for women to start planning for retirement security now. It’s best when you are young, but regardless of age, start NOW. I saw an article asking, What’s the magic number for your retirement savings? It said that people should plan on having in savings 10 times their annual salary by the time they retire. It is a lot, but if you start early, it can be done. Financial services firms such as ICMA-RC, among others, have many articles on saving for retirement. Some even have a calculator you can use to figure out what you should be saving based on what your goal is for retirement (what age, retirement income desired, etc.).
Retirement should be freedom to choose new adventures – discovering you like painting, re-learning the piano, or getting another non-municipal job. Securing your income is a great way to create the future you want. Start today with deferred compensation. If you are already participating, then increase it! You will thank yourself later for investing in your own future.
Jan Perkins is Senior Partner with the local government consulting firm Management Partners. She served as city manager for the cities of Fremont and Morgan Hill, California; was assistant city manager of Santa Ana, California; and started her career in Michigan in the cities of Grand Rapids and Adrian. Jan is an ICMA Credentialed Manager, graduate of the University of Kansas’ MPA Program; serves as an ICMA Liaison; and is a founding member of Women Leading Government – California.