Women and Retirement: Challenges of a New Life Stage
Women balance many responsibilities both inside and outside the home―whether it’s working full time, caring for their families, running a business, or volunteering in their community―women today are busy. Money management is one of their many duties, but sometimes women don’t feel equipped to make financial decisions, and finances may fall to the bottom of their priority list. Women face unique challenges when it comes to investing and planning for their financial future. Despite making up nearly half of the workforce, women continue to earn less than men, take more time off work for caregiving responsibilities, and have longer lifespans. These factors, among others, can make it more difficult for women to accumulate wealth and achieve financial security.

The Gender Pay Gap

The gender pay gap continues to affect women’s finances, making it harder for women to accumulate wealth and invest in their future. Women’s careers are often interrupted by taking time off for caregiving or household responsibilities. As a result, women may have fewer working years than men and lower average salaries. This all adds up to a smaller Social Security benefit, less money for retirement, and fewer growth opportunities.

Longer Life Expectancies

Women generally live longer than men, which means women need to plan for longer retirements. Women must save more money and invest it wisely to ensure that they have enough retirement income to support them in their later years. It is imperative to invest your retirement savings strategically, so you can ensure that your money lasts as long as you need it to.

Risk Aversion

Women are often more risk-averse than men when it comes to investing. This often results in a reluctance to invest in stocks, which can impact long-term growth potential. To overcome this challenge, it's important for women to understand that all investments come with some degree of risk and volatility. However, by creating a diversified portfolio that includes a mix of lower and higher-risk investments, women can balance risk and reward while working toward their long-term financial goals.

Time Off Work for Caregiving Responsibilities

Many women take time off work to care for children, aging parents, or other family members. These periods of time off work often result in reduced income, which can make it harder for women to save for retirement. It's important to evaluate the impact of reduced income on your long-term savings goals and develop a strategy that accounts for periods of reduced income to help you identify ways to maximize your earning potential.

Investment Confidence

Studies show that women are often less confident when it comes to investing than men. Women may be hesitant to invest in the stock market, which can slow down the process of wealth accumulation. Strive to build investment confidence through education which can help you understand investing concepts and develop an investment strategy that aligns with your risk tolerance and financial goals.

Healthcare Costs

Women generally face higher healthcare costs than men during their lifetime, including in retirement. Women’s unique health needs can contribute to higher medical expenses. One must evaluate their health care expenses to ensure they have a strategy in place to pay for them in retirement. Women outlive men and 2 out of 3 people in a nursing home are women, who on average need 44 months of assistance. Having a long-term care plan helps one maintain their independence and help cover the costs of medical expenses should you need them.

We believe that women have a crucial voice to share when it comes to their finances and investments. Here are some practical steps women can take to feel confident about these topics.

Develop Financial Literacy

Women who want to increase their investment IQ should make it a point to ask questions and learn more. Even if you do not have a strong interest in finance, learn enough to evaluate and understand your own financial situation. Knowledge is powerful, and there are abundant educational materials available. A trusted financial advisor can also provide resources or facilitate discussions to help you increase your financial literacy. 

Plan for the Unexpected

Everyone should prepare for unexpected situations and have estate planning documents like a will, trust, durable power of attorney, and health-care directive. Having established relationships with trusted professionals, such as an estate attorney, a CPA, and a financial adviser will ease difficult transitions.     

Start Investing and Saving as soon as possible

If you haven’t started saving or investing yet, don’t be discouraged or embarrassed. It’s never too late to start. Using the power of compounding, the earlier a person begins to invest, the more time assets have to grow—increasing the likelihood of meeting longer-term goals. But starting now is better than starting tomorrow or a year from now. Find a like-minded financial advisor you trust to help you get started.

Prioritize goals―like retirement

It’s common for women to put others’ needs ahead of their own, such as choosing to pay for their children’s college education instead of savings for retirement. This prioritization may seem like the right thing to do, but a woman is actually better off saving for her own retirement needs first. Her children may have access to educational assistance, such as scholarships and student loans, while she may only have limited time in the workforce to save for retirement.