Retirement Planning for Women: 5 Top Tips


Women generally have a unique life-career trajectory that is vastly different from what men go through. Their careers are likely to be interrupted by motherhood or caregiving for a loved one; they will earn less than their male counterparts and are most likely going to live longer than male peers.


Retirement Planning for Women

Given these unique sets of challenges, retirement planning for women often takes a slightly different path that takes into account all these factors but still tries to fit them all into a workable retirement plan.

In spite of being relatively good planners, only a third of women feel they are well prepared for life after retirement. But here, too, women tend to be at a disadvantage. Here is a look at some of the challenges women face when it comes to retirement planning:

Women are Making Less Money

The first bottleneck to successful retirement planning is that women generally make less money in spite of making up a huge part of the labor force. Women account for 46.8% of the labor force today. Incomes have been on upward trend in the recent years but for every dollar earned by their male counterparts, women make 80 cents. The median income for a woman working full time in California is $43,335 compared to $50, 562 for a man working full time.

Women are Living Longer

Living longer can increase the need to plan early to start working to your retirement goals.  In the US, the average life expectancy of women is 81 while that of man is 76. Women are living 5 years longer than men so, in general, they will need retirement funds that will stretch at least five years longer.

Women are Caregivers

While men also act as caregivers, women still make up the backbone of informal caregiving, accounting for 66% of caregivers. They will subsequently have a challenge saving enough for retirement because they will spend a considerable amount of their professional life acting as informal caregivers for their children, spouses or even elderly parents. They likely won’t be earning money during this time.

With the challenges of reduced incomes, longer lifespans and reduced earning power during the period of caregiving in mind, here are five retirement planning tips that can help women work toward their retirement goals:

#1 Work Longer
Because women are going to live longer, it makes sense that they work a little longer in order to build a safe retirement nest egg. Keeping yourself in the workplace for as long as possible allows you to continue to contribute to your retirement accounts and can help to avoid drawing on your savings during that period.

#2 Save Wisely
To help meet your retirement savings targets, it’s important to set aside money for your retirement accounts. If your employer is willing to match your savings in a 401(k) plan, try to save as much money as your employer is willing to match. Try to prioritize retirement savings in order to meet your long-term financial goals.

#3 Consider Your Life Choices
While there is a pay gap even in the best paying careers, many women tend to choose careers that don’t pay particularly well. . You might want to consider moving into a career that pays well or, if you like your chosen path, increase your qualifications to move up the pay scale.

#4 Make the Most of Social Security Benefits
It is important to properly acquaint yourself with the workings of Social Security Benefits. You will receive a social security payment based on your work history or that of your spouse. You may access your social security benefits at any time between 59 ½ to 70 years of age.  Talk to an investment advisor to discuss the best time to collect these benefits. Often waiting to do so while continuing to work can provide more of a financial cushion later in life.

#5 Are You the Beneficiary of Your Husband’s Retirement Accounts?
Don’t take it for granted that you will be the automatic beneficiary of your husband’s retirement accounts. Through the errors of omission or commission, someone else such as an ex-spouse or family member might be the beneficiary. Retirement accounts such as IRAs do not automatically designate the spouse as the beneficiary so check to ensure you are the primary beneficiary.

Divorce can be a devastating financial setback for some women.  If you are divorcing a partner who has been helping meet the expenses, it is prudent to have a good lawyer who will ensure a fairer division of assets. Anyone going through a divorce needs to watch their spending carefully. If your income is changed significantly by your divorce, you’ll want to be able to adapt and rebound. A financial advisor can help put together a thoughtful spending plan to help you live within your means, pay off debt and increase your savings.

Ask a room full of women about their hopes for retirement, and you might hear about travel, continued education, hobbies, grandchildren, and lots of rest and relaxation. While it is possible to meet your individual goals for retirement, it takes some serious planning. Expert financial planning advice can help. Contact us today!