Why Women Need to Plan Differently for Retirement
Retirement planning is essential for everyone, but for women, unique financial challenges make it even more critical to plan ahead. From longer life expectancies to career breaks for caregiving, these factors impact financial security later in life. By understanding these challenges and implementing smart strategies, women can take control of their retirement and build lasting financial stability.
1. Women Live Longer—Which Means More Savings Are Needed
According to the Social Security Administration (SSA), a 65-year-old woman today can expect to live until approximately 86 years old, while men have a shorter average lifespan of about 83 years (Social Security Administration, 2023). While longevity is a blessing, it also means women need their savings to stretch further.
💡 Solution:
Consider tax-deferred growth strategies, such as annuities, that provide lifetime income.
Maximize contributions to retirement accounts such as ROTH IRAs, ROTH 401(k)s, and HSAs for tax-free growth and long-term financial benefits.
Build a diversified income stream to ensure financial stability throughout retirement.
2. The Gender Pay Gap Impacts Long-Term Savings
Women still earn, on average, 82 cents for every dollar earned by men, according to the U.S. Bureau of Labor Statistics (BLS) (Bureau of Labor Statistics, 2023). This wage disparity results in lower lifetime earnings, reduced employer retirement contributions, and lower Social Security benefits.
💡 Solution:
Take full advantage of employer-sponsored retirement plans, including any available matching contributions.
Invest strategically in tax-advantaged accounts and income-generating assets to compensate for lower lifetime earnings.
If self-employed, look into Solo ROTH 401(k)s, SEP IRAs, or Participating Whole Life policies as wealth-building tools.
Schedule Your Free Consultation
3. Career Breaks for Caregiving Can Lower Retirement Benefits
According to the Pew Research Center, about 42% of mothers reduce their working hours or leave the workforce for caregiving, compared to 28% of fathers (Pew Research Center, 2022). These career breaks lead to lower lifetime earnings and reduced Social Security benefits.
💡 Solution:
If married, contribute to a spousal ROTH IRA to continue building retirement savings.
Explore investment options that generate passive income to help offset gaps in earnings.
Plan ahead for Social Security by understanding the best claiming strategies based on your work history.
4. Higher Healthcare Costs in Retirement
A Fidelity Retiree Health Care Cost Estimate states that a 65-year-old woman will need approximately $157,000 for healthcare expenses in retirement—not including long-term care costs (Fidelity Investments, 2023). Since women tend to live longer, they are more likely to require assisted living or nursing care, which can be expensive.
💡 Solution:
Contribute to a Health Savings Account (HSA) if eligible, as it offers tax-free growth for medical expenses.
Consider long-term care insurance or life insurance policies with living benefits to help cover unexpected costs.
Plan for Medicare and supplemental coverage to ensure you’re protected later in life.
5. Social Security Benefits May Be Lower
Because Social Security benefits are calculated based on a worker’s 35 highest-earning years, women who take career breaks may receive smaller monthly benefits in retirement. The Social Security Administration reports that, on average, women receive about $1,650 per month in benefits, while men receive $2,150 per month (Social Security Administration, 2023).
💡 Solution:
Work with a financial strategist to determine the optimal age to start claiming benefits.
If divorced, explore whether you’re eligible for spousal Social Security benefits based on your former spouse’s earnings.
Delay claiming until age 70 if possible, to receive higher monthly payments.
Schedule Your Free Consultation
6. Balancing Family and Financial Security
Many women prioritize family financial needs over their own, whether that’s helping children with college tuition or supporting elderly parents. A report by the Transamerica Center for Retirement Studies found that 56% of women prioritize family financial needs over saving for retirement (Transamerica Center for Retirement Studies, 2023). While generosity is admirable, it’s important to ensure your own retirement security isn’t compromised.
💡 Solution:
Create a holistic financial plan that balances both short-term family needs and long-term retirement goals.
Set boundaries around financial assistance while prioritizing personal savings and investments.
Work with a financial professional to develop a strategy that aligns with your unique situation.
Take Control of Your Retirement Future
While these challenges may seem daunting, strategic planning can help women build a secure and fulfilling retirement. By prioritizing tax-efficient investments, long-term care planning, and diversified income strategies, women can take control of their financial future.
If you want to explore personalized retirement strategies that fit your life and goals, schedule a free consultation. Together, we can create a plan that ensures financial freedom and peace of mind—for you and your loved ones.
References
Bureau of Labor Statistics. (2023). Women’s earnings as a percentage of men’s, 1979-2022. U.S. Department of Labor. Retrieved from https://www.bls.gov
Fidelity Investments. (2023). Retiree Health Care Cost Estimate. Retrieved from https://www.fidelity.com
Pew Research Center. (2022). Parenting in America: Mothers and Work Patterns. Retrieved from https://www.pewresearch.org
Social Security Administration. (2023). Life Expectancy and Social Security Benefits. Retrieved from https://www.ssa.gov
Transamerica Center for Retirement Studies. (2023). Retirement Security: The Gender Gap. Retrieved from https://www.transamericacenter.org
