Women Face Unique Risks in Retirement Planning

Planning for retirement is a challenge for everyone but it is even more of a challenge for women. Whether married, widowed or single, women have a tendency to come up short in their retirement funding. There are reasons for this and many of them can be avoided with a little knowledge and planning.

Contributing factors

Longevity is the number one challenge. Women tend to live longer than men, meaning they need a retirement income stream to last longer than a man may need it. Even though women tend to outlive men by eight years or more, they tend to plan their retirement in the same fashion that men do.

Women tend to earn lower salaries than men and are more likely to leave the workforce than men. Women will leave the workforce to be unpaid caregivers for children or other family members. This results in women having less money for investing in their retirements.

Social Security is another problem for women. Many married women will begin drawing Social Security benefits early because their husbands are receiving benefits. But if women will wait until the maximum age to draw Social Security, their monthly benefits will be higher.

Women should share the reins in retirement planning

The solution to the problem of women having inadequate retirement planning is simple: women need to take the reins of their own retirement planning. In many marriages, one spouse tends to take care of the “finances.” This can leave women completely unprepared if their spouse suddenly dies. A woman may have no clue as to her financial situation.

Become involved. Buy yourself an investment book, then digest every word of it. Talk to your spouse about your family retirement plans. Know where you stand in relation to your retirement planning.

It’s never too late

Being retirement planning savvy is not as hard as it may sound. Educate yourself on the basics of investing and you’ll find yourself feeling much more comfortable making decisions. Remember that it is never too late; you can make small adjustments to your savings or investment plans that can have a big impact over a relatively short time.

If you’re still working, check on what retirement options your employer may offer. Many employers will offer financial workshops or make advisors available for those employees participating in 401(k) or 403(b). If your employer offers a pre-tax savings program, look into participating there. Even a small monthly contribution can make a difference when you reach retirement age.

Make a financial friend

Women tend to like to do things together. Why not apply that tendency to your financial management? Find a trusted friend who will take the education journey with you to become investment and retirement literate. It can be a family member or a buddy at work. Having someone to share the trials and tribulations of getting up to speed on what you’ll need for your retirement, independent of your spouse, can make it all seem far less overwhelming.

Your financial friend can even be your spouse or partner. Money as a topic of discussion should never be off-limits in a committed relationship. You don’t have to discuss your finances over dinner each night, but you should have regular conversations to build a core understanding of your retirement goals, your savings and your investments.

Discuss it once a year at least, then go on vacation and enjoy.

About the Author:

Gabby is a freelance writer and editor with over 10 years of experience writing about personal finance, beauty and fashion as well as other lifestyle topics. When she’s not writing, Gabby likes traveling and exploring the world. And she loves cats.