Why Planning for Retirement is a Women’s Issue

Retirement. That bright spot glimmering in the distant future full of the promise of rest, relaxation, and endless days in the Florida sunshine. But retirement is more than just ending a career or deciding which southern state to settle in. Retirement is a whole new financial landscape that we will all have to learn to navigate someday. However, planning for retirement isn’t something that should be kicked too far down the road. From day one of our professional lives we should be taking steps to ensure we can have secure and stress-free lives following our working years. 

Most people are aware that they should start retirement accounts and start putting money aside for the future so that they have funds to pull from when they no longer have a steady income. But most people aren’t aware that retirement looks very different for men and women and that retirement is very much a women’s issue.

Although women often open the same types of retirement accounts and save just as much of their paycheck as their male counterparts, the majority of women still enter retirement financially unprepared. In fact, research shows that nearly 36% of women over the age of 80 are actually living below the poverty line, despite having had careers that allowed them to save for retirement. Additionally, only about 39% of women are confident that they’ll have enough resources to last a good 25 years into retirement. Because of this more and more women continually push back their retirement in hopes of earning enough to support themselves with. 

The reason that many women find themselves treading water financially during the years after retirement is because women are fundamentally different from men and thus have different needs, career trajectories, and lifestyles. Although almost 90% of women will handle their own financial assets at some point during their lifetimes, they often aren’t taught the ways in which their financial planning will need to look different than it does for men. Women need to be aware of which factors can affect them in their later years and how being a woman alters the retirement planning process.

So, to keep you from having a three-quarter life crisis when you’re 67, I’m going to break down what retiring as a woman will likely look like for you. That way you can be revved and ready to take on retirement when the time comes. 

Here are some of the main reasons that retirement is going to look different for you than it will for your husbands, friends, brothers, and fathers:   

1. Women typically earn less than men due to the wage gap

Ah, yes, the wonderful wage gap that we’re all such big fans of. I’m sure you’ve heard it a million times before, but the harsh reality of the business world right now is that, even if a man and woman work the same job for the same number of hours, men almost always earn more. In fact, women of all positions in the US typically make only $0.82 to every man’s $1. Although this wage discrepancy is 100% not fair and is hopefully something that we can eradicate in the next few decades, it is a current reality of our modern business world and we need to plan with it in mind. That means realizing that, although we may be working just as hard as our male co-workers, us ladies are going to have to save even more in order to be financially stable during our retirement. This means we need to be super savvy about how we save, invest, and work to make sure we’re setting our future selves up for success during retirement. 

2. Women outlive men by an average of 6 years

You heard me, ladies! According to the World Health Organization women live an average of 6-8 years longer than men because of female biological advantages and the fact that women make different life choices, ie. smarter life choices than men. That means that not only will you have more time with grandchildren, friends, and pool-side mimosas, you will also likely have to support yourself financially more than half a decade longer than your husbands or partners. So, even if your brother will have enough money in his retirement account to live out his retirement in sunny Georgia, you will likely require more moolah to live the rest of your long life comfortably. Make sure you you take those extra years into account so you can make every dollar in your retirement fund last!

3. Women have higher healthcare costs in retirement

As we age, we usually begin to require more and more medical care to keep us alive and kicking for as long as possible. Because we women usually stick around a bit longer than our male counterparts, we also tend to rack up higher health care costs -- almost $17,000 more to be exact. Additionally, if a woman loses the partner who was her primary caregiver, many older women may have to seek more permanent long-term care at a nursing home or retirement facility. Almost 66% of those in nursing homes are women, and the average annual cost for such care facilities can range anywhere from tens of thousands of dollars to hundreds of thousands. 

Basically what this means is that being an older woman can be expensive, but it doesn’t have to stressful. If you start making a plan for retirement now -- taking into account all the extra costs you might have as a woman -- then you’ll be free to enjoy time with grandkids, friends, and pets without any financial anxiety.

4. Women take time off to be caretakers 

Although we no longer live in the 1950s when every woman was expected to be a mother, wife, housekeeper and Michelin star chef all at the same time, almost 86% of modern women still decide to become mothers and start families. Of working professional women, working mothers make up almost 32% or nearly half of the female workforce. But balancing a career and raising children is not an easy feat. Consequently, many women take time off to have children and start families. For some women this extends beyond typical maternity leave, sometimes lasting for many years as they raise their children and get into the groove of parenthood. That means that some women aren’t working the exact amount of time they were expecting to work for when they set up their retirement account. Of the projected 40 years of work that the average person completes before retirement, a woman may only work 30 as she attempts to care for her children and establish a happy, functioning family unit.

Most women are earning nothing or only working part time during these years away from their jobs, meaning that less and less money is being funneled into their retirement accounts. By contrast, men with children often work through those years when their wives are unemployed, resulting in them saving more money and having more funds set aside for retirement. This isn’t to discourage women from settling down or deciding to have children. Women simply need to be aware of the impact that being full time caretakers will have on their retirement and how to adjust their plans accordingly so that they have enough money to make it through their post-career lives.  

Retirement shouldn’t be feared. It might seem like a big financial monster looming in the distant future, but really it can be a pretty easy dragon to slay. 

Here are 3 simple steps to start planning for retirement:

1. Look to your employer retirement plan if applicable. This is the simplest place to begin investing.
2. Estimate how much money you'll need in retirement. Head to NerdWallet and crunch some numbers using one of their retirement calculators.
3. Now that you've estimated how much you'll need, determine if you're able to bump up your 401k contributions or look to opening an IRA. And if you need guidance opening an IRA, you can grab my free step-by-step video course on how to open one.

And understand that, just because a saving plan worked for your uncle or your father or your brother, doesn’t mean that it will necessarily work for you. You have to look at retirement from a holistic perspective and be mindful that your retirement planning experience as a woman will need to look different. 

Right now only around 39% of women are confident that they’ll have enough resources to last 25 years into retirement. I’m confident that with more education, some strategic planning, and general badassery we can get that number up to 100% and we can make sure that every woman has the resources and know-how to have an enjoyable and worry-free retirement. 

Sources:

5 Facts About the State of the Gender Pay Gap - U.S. Department of Labor

100 Must-Know Statistics About Women and Retirement - MorningStar

6 Shocking Facts About Women and Retirement - Debt.com

Why Financial Planning is a Women's Issue - The Atlas Approach

Retirement Planning is Different for Women - Kiplinger