Women Retirement Planning Finances For Women

Why Women Need to Be More Proactive with Retirement Planning

Updated on Dec 07 2018


While retirement planning is important for every person, retirement planning for women is crucial given the unique financial challenges for women. With a longer life expectancy, a greater likelihood of taking on family caregiving responsibilities, and the rise of divorce rates after 50, women need to better protect themselves in retirement by preparing for their financial future.

Many Americans are unprepared for retirement, but women are especially vulnerable to financial problems later in life for a multitude of reasons. Diligent financial planning and retirement preparation are key when it comes to making sure you’re ready for your future.

Here’s what every woman needs to know about retirement planning.

Unique Challenges Facing Women and Retirement Planning

There are few reasons why women need to be proactive in retirement planning. While men usually take on the long-term financial planning, women need to have an active role in understanding what it will take to have a financially successful retirement.

1. Increased longevity.

The average American woman lives to be 86.6 years old. 25 percent of women who are older than 65 will live past the age of 90 and a whopping 10 percent over the age of 65 will live past the age of 95. After a spouse passes, retirement income can become confusing with some companies giving survival benefits from a pension of around 50 percent. Because women are outliving men and men are generally making more money, living a long and healthy life can mean trouble for financial success in retirement. A financial advisor can help you assess your investment time horizon for your estimated life expectancy.

2. Less time in the workplace.

Not only do women often take more time off work to have and raise children, women typically retire earlier than men. Women generally retire two years earlier than their husbands and many take time off to raise young children, returning to work after their children are more independent. Less time in the workplace means less earnings and less contributions to a retirement savings plan.

3. Gender income gap.

Across their lifetime, women make $0.81 for ever $1.00 a man earns - and the income gap is wider for minority women. The gender gap means that women are not able to save as much for retirement and any contributions being matched by their workplace is less than what is being matched for male counterparts.

4. Gray divorce and widowhood.

Retirement planning for single women can bring unique challenges. As ‘gray divorce’, or divorce after the age of 50 rises, and women are more likely to be widowers, it’s increasingly likely that a woman will be single in her senior years. Nearly 40 percent of women between the ages of 45 to 64 are unmarried. And, nearly 50 percent of single women retirees are fearful they will run out of retirement savings if they live past 90 years old.

Retirement Planning Tips for Women

Research from the Bank of America Merrill Lynch and Age Wave show that these factors can put women at a serious disadvantage for retirement planning. Their study found that after accounting for the wage gap, time off work, and early retirement, men can earn as much as $1,055,000 more than women over their lifetime. Combined with increased longevity for women, retirement planning is crucial for women.

No matter if you’re 20 years away from retirement or just a couple of years, it’s not too late to start planning for your financial future. Contacting a fiduciary financial advisor is the first step to creating a retirement plan for women who want to be well-prepared for the future - and whatever it brings. An expert financial advisor or fiduciary can help you invest and plan for your unique needs.

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