As women, we will encounter many of the same worries as men: outliving assets, not saving enough, not investing well enough, needing long-term care, becoming disabled, losing a spouse, or falling victim to a scam. However, the life path, types of careers, patterns of work and experiences of women during their lifetime can make retirement security more elusive. Below is a summary of the top 5 hurdles we face:
- Equal pay has been the law since 1963 but today women continue to earn less than men. Overall, we have lower career earnings due to lower wages, fewer years of paid work before retirement, and a greater chance of having worked part-time. As a result, we have lower balances in employer-sponsored 401(k) and other defined contribution plans.
- Women tend to invest their retirement portfolios too conservatively. While it is usually best to avoid excessive risk, being too conservative can hurt over the long haul because it might cause you to forego the growth opportunities you need to build a retirement nest egg.
- The U.S. Department of Labor estimates that 9 out of 10 women will be solely responsible for their finances at some point in their lives. Factors contributing to these figures are spouse’s death, divorce and the fact that, on average, women outlive men.
- Women are more likely to assist with caregiving needs than men and less likely to have a family caregiver if they need help. An estimated 66% of caregivers are female, and their average age is 49. Taking time off to provide care for a loved one can disrupt a woman’s sustained accumulation of retirement funds. Even if she has accumulated assets, caregiving responsibilities may require her to spend them prematurely.
- Women have longer life spans. According to the Social Security Administration, at age 65, women can expect to live an average of 21.5 more years and men an average of 19 more years. * That’s a long time to go without a paycheck! This means women need more money to achieve the same standard of living in retirement and must make the money last longer.
Take Charge! The first step is to recognize the unique financial challenges we face and to meet these challenges, we should:
- Take an active role in our finances
- Start saving and investing as early as possible
- Carefully consider investment options and implications of being conservatively invested over a long period of time
- In making career and job choices, consider the employee benefits available in the industry and company.
*Source: Social Security Administration: www.ssa.gov/planners/lifeexpectancy.html, accessed January, 2020.
