Women and Retirement


Recent financial studies have shown that in general, American workers are lagging when it comes to saving for retirement. In a survey conducted in 2016, over fifty percent of Americans worry about their financial futures, while just over 35% feel confident that they’ve saved enough to retire comfortably. Women are affected by lagging retirement savings more than men; women have many unique challenges they must overcome to save enough for retirement.

Why Are Women Saving Less?

There are several factors that make it harder for women to save sufficient money for retirement purposes. While much progress has been made over the past 20 years, women still struggle with conditions that their male counterparts do not have to worry about.

One of the primary factors that influences retirement savings for women is the so-called “gender pay gap”. Historically, women earn less than men, even in the same jobs. Obviously, earning less means that there is less to set aside for future use. The pay gap is shrinking, thanks to new legislation and awareness on the part of employers. Still, enough of a gap exists that impacts retirement savings.

Second, women tend to live longer than men, thus requiring more savings for retirement. Women need to be aware that statistically, they will have longer lives, and any shortfalls in retirement savings can impact their ability to live comfortably in retirement.

Women also have unique responsibilities that their male counterparts may not have to face. Leaving the workforce to raise children or to care for relatives cuts into the amount women might earn over a lifetime. This has a two-fold effect: one, earning less over a lifetime means that there is less to set aside for retirement, and two, those reduced earnings affect the amount of government benefits they may receive in Social Security and other programs.

Planning for the Future

Faced with reduced earnings and the possibility of reduced government benefits, many women plan to put off retirement as long as possible. In fact, surveys conducted over the past several years have indicated that as many as 50% of women polled do not plan to retire at all or plan to retire well after the traditional retirement age of 65 years.

Over half of all women polled in surveys also indicated that they plan to work after retirement. 11% of women in these surveys plan to work full-time, while nearly 40% expect at least part-time employment. These numbers are roughly in line with male workers polled in similar surveys. In general, the trend in male and female workers is that they plan to retire later or to continue working for as long as possible.

While working later into life may chip away at any retirement savings shortfalls, health concerns can impact how long one is able to work. Surveys suggest that almost 20% of women do not have a plan in place for the possibility of forced retirement due to health issues, job losses, or obligations regarding family members.

Government Benefits and Women

Social Security benefits and other government-sponsored financial assistance programs are available to U.S. workers. Women tend to be slightly more likely than men to rely on these programs for their primary retirement income. However, because of lower lifetime earnings, many women are shocked to discover that those benefits they plan to rely on won’t cover enough of their costs once they retire. Social Security benefits are dependent on lifetime earnings as well as one’s status; benefits may differ between working women and those who stay at home to raise children or those who are listed as a spouse on another person’s records. Benefits may also be affected by the death of a spouse or in the case of divorce. Women need to understand what benefits apply to them and how those benefits can be affected by outside forces.

The Good News for Women

Is there any good news for women as they head toward retirement? Yes – studies have indicated that as many as 72% of female workers in the United States take advantage of employer-sponsored retirement plans such as pensions or 401(k) programs. Many women also contribute to retirement savings through IRAs or mutual funds outside of work.

Women tend to be more conscious of their health and job skills than their male counterparts. In polls, 62% of women report that they are staying healthy in an effort to be able to work longer in life. Nearly 50% of women are also keeping job skills up to date, making them more able to continue working past retirement age.

Getting Help for Retirement Savings

The first step in any solid retirement savings plan, regardless if one is a man or woman, is to invest time in researching future financial needs. There are many retirement savings calculators available on the Web. These calculators can help workers determine how much they need to save. In several surveys, over half of all women polled indicated that they were using guesswork to figure out what they might need in terms of retirement savings. Fewer than 10% of all women in the surveys had used a retirement savings calculator.

A great alternative to a savings calculator is to get help from a retirement planning specialist. Financial planners have the knowledge and the experience needed to guide workers toward suitable savings plans. Historically, women have not taken advantage of professional advice, and this can be a critical mistake.

Overcoming Shortfalls

Faced with pay gaps and the demands of raising children, many women struggle to save enough money for retirement. All is not hopeless, however. For women working for companies that offer a pension or sponsored retirement plan like a 401(k), it is critical to take advantage of these plans. Making the maximum contribution to those plans makes solid financial sense. In many employer-sponsored plans, the company matches contributions dollar for dollar. This is “free” money, and it is foolish to skip out on these valuable benefits.

Diversifying savings is another great solution. If finances allow, making regular contributions to a Traditional or Roth IRA can cover future financial shortfalls. There are tax benefits available, too – contributions to a Traditional IRA can be deducted from annual taxes, while distributions from Roth IRAs after retirement are tax-free. These benefits apply no matter if one files taxes as a single person or jointly.

Finally, getting help from a certified financial planner can greatly affect future savings. Retirement planning specialists can give their clients a pathway to saving, helping them to live comfortably after retirement.



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