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Q: When is 15% savings not enough to retire?

A: When you are a woman.

Consider this:

As a woman, you are more likely to

1. Be out of the workforce to take care of children or parents for 1-3 years on average
2. Be living longer than  your husband
3. Be earning less than men in comparable jobs - the famous 23% wage gap where women earn only 77cents for every $ earned by men
4. Be working in a part-time/non-profit job with no/minimal retirement benefits

So the next time you look at an online retirement savings calculator that says you should save 15% if you are below 30 years of age, please ADD ATLEAST 1% MORE for each of the points above that apply to you. Since 2 & 3 apply to nearly all women, you should be looking to save at least 17% of pre-tax income.

Then we come to the other half of retirement savings - investment. Most women have one or both of these two problems while investing:

1. Not understanding or knowing the latest options/information available - this can range from not knowing that maximizing a Roth IRA is better than funding your regular IRA all the way to not knowing the latest interest rates for savings accounts.  
2. Not taking enough risk - A majority of women have their money in “safe” investments like CDs that do not maximize returns over the long term unlike stocks.

If you are currently not investing in stocks either because you do not understand them or because you are afraid, ADD ANOTHER 1%. Then sit down and start educating yourself on investing for the long-term!!

And the proof that you need to save more is right here:

Google search of “savings women” - check out how the first article is for women to save more. Of the top 10 links, 6 are exhorting women to save more. And “Did you mean to search for” shows a very helpful “savings when“. And the kicker - 4 links are advertising products. Now when does shopping for stuff help you save money? The answer: NEVER.

Google search of “savings men” -  the first article is about shopping. Of the top 10 search results,  3 again talk about how women trail men in savings.

The bottomline: Everyone agrees that women need to save more than they currently are and learn about investing for the long-term. And help is right here for you to start

Tags: retirement, saving, women by zzz
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For the uninitiated, NRI is a Non Resident Indian. 

There is your dollar, sitting in

• checking accounts with no interest, 
• savings accounts earning less than 1%, or 
• money market / high yield savings accounts earning around 5%.

As you track the consistent fall in the greenback’s value and wonder whether something can be done, look no further than the home country.

The simple math: Savings accounts in the US are currently yielding around 5% annually. In India, you can get 6.5% for the same money.

Consider this scenario - you want to buy a home and would like to save around 10 lakhs in two years. If you send the money to your recurring deposit account in an Indian bank @ 1000 dollars a month, you will have 996,688 rupees after year 2. Holding the amount in dollars will net you 26,290. At the current exchange rate of 39$, you will fall short by 15000 rupees.

Of course, this assumes that the exchange rate will stay closer to 40.

Here’s a probably stupid and I hope to be proved wrong prediction: I think the rate will go down all the way to 35 Rs for each dollar. This would mean converting at the end of year 2 leaves you with a shortfall of 115,181 rupees. 

My 2 cents - if you plan to use the money in India within the next 2 years, it is better to have your savings in rupees.

Tags: Indian Banks, NRI by zzz
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