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Unique Retirement Planning Challenges for Women

Concerns about retirement can be even greater for women, who face unique challenges when planning their retirement years. Learn more about these challenges here and how you can overcome them.
Unique Retirement Planning Challenges for Women

Below, we attempt to highlight a handful of these challenges and pose solutions that can alleviate some of the stress women face at this critical life juncture.

They live longer.

It’s old news at this point that women have a longer life expectancy than men, living to an average age of 86.7 years, while men top out at only 84.3. Married women tend to outlive their husbands by an average of 11.5 years, which translates to the widow then needing to handle all household expenses.

Given these stats, it is critical that women have a plan in place to maintain retirement income into their 90s. Social Security will help, but additional investments and savings may be necessary—and the planning for these should start early.

They are (still) underpaid.

Although the gender pay gap has shrunk in recent decades, women continue to earn significantly less—only 82 percent of what their male counterparts earned in 2016. It gets worse for women of color—black women earned 60 cents and Latinas 55 cents for every dollar made by a white male. This gap is particularly important in households where women are the sole source of support.

They invest differently.

In addition to having different pools of money at their disposal, women and men tend to use it differently, particularly when it comes to investments. As a general rule, women maintain portfolios that have lower levels of stocks and measurably higher percentages of cash and annuities. This can put them at a disadvantage, as stocks are essential for a portfolio to post high returns. Although they carry a higher level of risk, stocks generally perform better than other asset classes. As a result, come retirement, women are prone to having less robust portfolios and smaller pools of resources.

They work differently.

Despite the many moves toward gender equality in the home and at work, drastic life changes, including marriage, children, divorce, and eldercare, all still fall disproportionately on women. The reasons for this are wide-ranging, and the effects can be substantial:

  • Divorce. Household income on average drops by 41 percent for women nearing retirement age, but only 23 percent for men. In addition, if the marriage lasted less than 10 years, or if the woman remarries, she won’t have access to benefits that would come from her ex-husband’s Social Security.

  • Student debt. Women owe two-thirds of the $1.4 trillion in U.S. student debt. Lower pay means these debts hang around for longer and cut into the years that their male counterparts are saving for retirement.

  • Eldercare. Being the primary caregiver for an elderly parent, relative, or family friend typically means reduced hours at work. This can disrupt wages, endanger promotions, and provide fewer years to contribute to employer-sponsored retirement programs.

  • Part-time employment. While the percentage of working women has continued to go up in recent years, many of them—nearly two-thirds—work part time. As such, they often lack access to benefits, including health insurance, paid vacation, and employer-sponsored retirement savings plans. U.S. Census Bureau data confirms this, showing that women in the workforce are less likely than men to be eligible for retirement plans in their own workplace.

Standard retirement calculators aren’t able to take these considerations into account, as they rely on basic, predictable indicators like income and inflation rates.

They pay more for healthcare.

Mixed in with these other factors is the issue of healthcare costs, which are a concern for all retirees. Retirement-age women typically pay more for healthcare than men, by as much as 30 percent. A woman will likely live longer and is, therefore, less able to count on her spouse to care for her in the event of a severe illness. She will now require in-home or outpatient care. With healthcare costs expected to rise in the coming years, this remains a top concern for women of all ages.

There is good news.

We all wish for a long, prosperous life. But there are costs to longevity alongside the perks. Proactive, comprehensive retirement planning—at any age—can help overcome any disadvantages that women face. It’s never too early, or late, to start saving. Put a few dollars away from every paycheck. Make sure your investment portfolio has an acceptable amount of risk so that it brings the returns you want. Get started today—we have an e-book that can help.

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