Men are from Mars and women are from Venus, as the saying goes. Well, when it comes to retirement, men and women are often very different in their needs. For starters, research shows that women are better investors than men. Why? Because women are less likely to feel overconfident in their investment decisions and tend to make fewer changes to their portfolios as a result. Women, however, have a unique set of issues in retirement that often makes them more vulnerable than men. The issues women face can make it harder for them to have an enjoyable retirement without careful planning. These issues include, among other things:
1. Longer life expectancy
Women, on average, live longer than men. This means that they have to plan on making sure their savings last longer as well. A 65-year-old woman can expect to live about 2 ½ years longer than a 65-year-old man. Depending on your expenses, this can add up to a significant amount of money. Overall, women live nearly 5 years longer than men, according to the U.S. Census Bureau. Since women tend to live longer, that means they are more likely to live alone later in life, and therefore are likely to have to pay all of the expenses by themselves as opposed to sharing those expenses with a spouse.
2. Caring for an aging parent
It’s of little surprise that the person most likely to take care of an aging parent is their daughter. According to AARP, 61% of caregivers are women versus 39% men. Worse, nearly half of those women have had an adverse effect on their own finances as a result. The number of family caregivers has increased by 20 million from 2015 to 2025. Worse still, 6% more are caring for more than one person. This data tells me that the financial burden being placed on these women will continue to increase dramatically in the coming years. Women aged 50 and older who leave their jobs in order to care for an aging parent miss out on an average of $324,000 in pay, according to the Women’s Institute for a Secure Retirement.
3. Working fewer years
Women typically work fewer years than men due to raising a family, resulting in less savings in retirement plans. Fewer savings and a longer life expectancy can translate into a much less secure retirement.
4. Women typically receive less Social Security
Factors such as fewer working years and gender pay inequality mean that women often receive less Social Security. As a result, women receive, on average, nearly $4,000 per year less than men, according to the Social Security Administration. Delaying benefits might help offset some of this reduced income, if you have enough savings to wait to collect your benefits.
So, what can women do in order to help make their retirement more secure?
For starters, meet with a financial planner to discuss your retirement goals. Having a good understanding of what you want retirement to look like is the first key step. Next, look for ways to maximize your retirement savings. Increase your contribution rates every year, even by a small amount. Try to delay collecting Social Security benefits in order to maximize your income. Your planner can help with these calculations to see when the optimal time to collect could be. Lastly, look to contribute to a Health Savings Account (HSA), if possible, in order to mitigate the potentially higher medical expenses that go along with increased longevity.
Women have unique challenges in retirement and therefore, should plan out their own strategy instead of just heeding conventional wisdom. Register for our Women & Wealth Monthly Workshops by visiting https://www.reichassetmanagement.com/events.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS visit https://bit.ly/KF-Disclosures.
Eric is President and founder of Reich Asset Management, LLC. He relies on his 25 years of experience to help clients have an enjoyable retirement. He is a Certified Financial Planner™ and Certified Investment Management AnalystSM (CIMA®) and has earned his Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®) designations.
