How Preparing for Retirement is Different for Women and What We Can Do About It

How Preparing for Retirement is Different for Women and What We Can Do About It

Most women in America will be disproportionately impacted by America's retirement process, and not in a good way. Women face unique challenges when it comes to retirement, including:

  • Women face the reality of longer lives with fewer financial resources to fall back on. According to Debra Whitman, Executive Vice President of Policy, Strategy & International Affairs at AARP, women out-live men by an average of three years. This certainly requires a different outlook and plan than men.
  • The pay gap between men and women is narrowing but still exists. Women make about 84% of what men earn, according to the Pew Research Center , so it's difficult for them to save more.
  • In a research report executed by the Transamerica Center for Retirement Studies, only 7% of women say they are "very confident" about being able to retire with a comfortable lifestyle, and 43% said they expect to work past the age of 70 or never retire.
  • Only 36% of women (vs. 63% of men) are comfortable selecting investments that are right for them, according to a survey by consulting firm PWC.
  • Only 29% of retired women have a pension, compared to 50% of men. 27% of women who are close to retirement live paycheck to paycheck, compared to only 19% of men, per a study by Voya Financial
    • So how can women work through these hurdles and get going on saving for retirement?

      1. Get involved  Take an active role in retirement planning decisions. While women take charge of the household spend, they are less likely to be in charge of retirement investing.
      2. Research - According to Voya Financial, women are more likely to ask for help and gather lots of data. Women have an edge  a tendency to research investments diligently before buying. We should use this edge.
      3. Be patient - Women tend to avoid trading in and out of investments. That bodes well for our long-term investments.
      4. Budget - If you can set aside 15% of your income, do it. If you can't afford that, start with at least 3%, or whatever you can afford. No matter how old you are, whether or not you have any savings, just start now.
      5. Ask questions - According to Melody Hobson, President of Ariel Investments, women need to make sure we are informed, continue to ask questions, be patient and focus on the long term. It will definitely help overcome some of the long-term challenges that we face women in retirement.
      6. Plan and monitor - As women, we need to insure we are on the right track to building a secure retirement plan that will allow us to continue to live the same comfortable lifestyle or better than when we were employed.

      We women certainly face retirement challenges that men don't, but these are easily overcome by careful planning, research and patience. Make sure you follow these simple steps so you don't get caught short-handed when you're ready to retire.