Why at (almost) 33 I'm scared of being old and broke

Many women end up financially underprepared for retirement, and I'm striving to avoid that now, writes Sophie Hallwright.

Getting older freaks me out. I’m about to turn 33, which I realise puts me in the spring chicken category, especially considering I plan on living to 100.

I would love to claim that I’m choosing to age gracefully, however the truth is I’ve already spent quite a lot of money on Botox. And as much as I want to say that, when I look ahead to my golden years, I’m excited to put my feet up, that would be dishonest. I’m kind of dreading it – and not just because of the wrinkles.

Let’s just get one thing clear, I adore old people. My grandad was one of my best friends, and he lived to be near 104. I admire the wisdom and confidence that often comes with age, but I’m terrified of some of the changes it brings.

The Botox might stave off elements of the ageing process but it doesn’t answer the question of how I’m going to afford to live when I’m no longer earning a salary. That’s what bothers me most – more than the thought of my face sagging beyond recognition, my boobs having zero bounce, and even the health risks that come with getting older – money.

I shudder at the thought of being elderly and accounting for every dollar I spend, grappling with medical bills or being unable to visit family who live far away. I know that’s the position many people, particularly women, find themselves in, and I’m trying to get a grip of my almost-33-year-old self and take steps to avoid it.

The statistics speak for themselves. Women need to start planning for retirement as soon as they get into their first job. The high percentage of women who fall into poverty as they get older is frightening, but also not surprising given the lack of financial education we have all had.

Never mind the pay gap, the retirement savings gap is huge by comparison. Take KiwiSaver, their latest data shows that, on average, women in their 40s have 32% less saved than men. And, according to the Ministry of Women, that savings gap between women and men, just widens with every decade, leaving women in the 65-plus age group further behind men than ever. On top of that, women are, on average, destined to live longer than men, eking out their paltry savings for an ever increasing number of years.

Remember that, unlike most men, the majority of women take time out of the workforce to have kids, and when we do return, it’s often part-time. It takes us almost 10 years to get back to our pre-kids earning capacity, if and when we do return to work.

Also, the gender pay gap is still very real. On average, we earn 8.6% less than men, a figure that’s almost halved in the past 25 years, but is still substantial and puts a serious dent in how much we can save for the future.

And then there’s the fact that women have not traditionally been encouraged to embrace investment opportunities and have a bold, big-picture attitude to finance. Instead, we’re targeted by marketers, and enticed to spend our extra income on a billion products that men don't seem to require, “because we’re worth it”.

Relationships can play a factor too. Women in traditional marriages often remained financially ignorant, leaving those matters to their husbands and finding themselves uncomfortably ignorant of the financial situation if the relationship went south or their partner died.

Every time my business partner Victoria Harris and I would introduce the subject of retirement in our finance and investment education sessions, we would see everyone’s eyes literally glaze over (and a few yawns in the crowd!). Our typical audience member is in our general age group and probably feels they have at least a decade or two before they need to worry about retirement. We wanted to try and change that misguided attitude so we decided to rebrand the topic.

We now refer to retirement as the "20 Year Holiday" – something fun to look forward to, a time of freedom and exciting possibilities. This reframing was the only way I was able to get my head around putting money aside now, for later.

Start immediately: Begin contributing to your 20 Year Holiday Fund as soon as you can. Twenty is not too young. And 60 is not too old. Even if you’ve spent much of your working life oblivious to your retirement needs, your future self will be grateful that you woke up when you did.

Seek sound investment advice: Just having your savings sitting in the bank will not see them grow the way they can and should. Talk to a reputable financial advisor and make sure you’re putting your savings in a good fund. A growth fund (aka a high risk fund) will generally mean that your money will grow faster, and if you have one decade or more before you retire, such a fund can usually withstand the ups and downs of being high-risk. But I can’t understate the importance of seeking good advice.

Make it super simple: Something Victoria and I teach on our platform is what we call The Lazy Girl Pay Method. This is a system of automatising savings so that you don’t constantly need to make difficult decisions between cocktails tonight or a well-heated home when you’re 70 (do it that way and the cocktails will always win). When your savings are automated, you can put them out of your mind and concentrate on having as much fun as you can with the money you have left.

Plan for children: If you see children as part of your future, make sure you think about how this reduced salary will not only impact you now, but in the future too. If you have a partner perhaps they could also work part-time once you have children, enabling you to pick up some work hours sooner? Could grandparents be part of the childcare picture, enabling you to avoid hefty childcare fees? Maybe your employer could allow you to segue into a role that allows more working from home and therefore less commuting and all the costs that entails? The possibilities are endless and you’re well within your rights (and smart) to inquire about them, long before you even conceive.

Proper planning for parenthood means your retirement savings won't take a major hiatus while you raise your family.

When you open your eyes and view your retired future as a privilege, it stops being something to fear. With planning, getting older can be a time of freedom and beauty. With or without Botox.

For more on saving, budgeting and investing, head to The Curve.