Ladies – Are You Planning for Your Security in Retirement?

By Teresa Milner

Ladies – Are you planning for your security in retirement?

We all encounter many worries when planning for our future: not saving enough, making bad investment choices, potential early death of a spouse, becoming disabled, outliving your money. These worries are shared by both men and women, but there are many differences in the lives of men and women that we should be aware of.

Women face some unique challenges when it comes to planning for life and finances.

1. Women generally earn less than men and wait longer to start saving.
2. Women often live longer than men.
3. Women tend to be more conservative investors.
4. Women often fill the role of family caregiver and leave the workforce to raise children.
5. Women are more likely than men to be single during their adult life.

While there are many challenges, these are the five most prominent that come to my mind when I think about retirement security for women. Sit back and think about all the decisions you make in life today that have an impact on your security in the future. Let’s dig a bit further into each of those factors for retirement planning for women.

Earnings Gap (Still a Thing)

The earnings gap is getting closer between men and women. Currently, women earn on average $0.82 for every $1.00 earned by men. Many factors influence this gap such as fewer years of paid work before retiring, lower earnings due to career choice, and a greater chance of having worked part-time, according to the US Department of Labor.

Saving Early

In my opinion, making the decision to save early will have the most impact on your long term financial success. For example, if you want to accumulate $1,000,000 by age 65, begin at age 25 and save $9,700 a year (assuming a 4% annual rate of return). If you wait to start accumulating your $1,000,000 at age 55, you need to save $71,600 a year! Having the power of compounding on your side makes an enormous difference.

Longevity Differential

Today women are outliving men in every country in the world. Life expectancy for ladies is 81.2 years compared to 76.4 years for the guys (3). That’s nearly 5 more years of living the dream, ladies! Often times, after caring for everyone else in our life, we are left with little help for our final years – physically, emotionally and financially. Retirement planning for women has to have longevity built into it.

Playing it Safe

Ladies, in general, are more conservative investors, so they tend to miss out on the opportunities available to grow their savings. We often accumulate less than men (due to many challenges), so combine that with our conservative nature, and we limit ourselves on the fact that we need to make our money last longer – uh oh!

Caregivers by Nature

Women are caregivers – period. We take care of everyone around us first, and then if there’s anything left over, we might take care of ourselves (or we might just take a nap!). We take ourselves out of the workforce to raise our family. Then when we get to our later working years, we take ourselves out of the workforce to care for our aging parents.

Removing yourself from the workforce disrupts your accumulation of retirement funds, and it often comes with lower earnings upon return to the workforce.  Another indirect cost of being a caregiver and taking yourself out of the workforce is the reduced benefits from Social Security.

The Single Life

It’s estimated that 9 out of 10 females will be single at some point during their adult life and due to longer life expectancy we spend many years of retirement alone. Being single comes in many forms, such as never marrying, divorce and widowhood.

Failing to Plan is Planning to – You Know the Rest

Planning is extremely valuable in being able to live comfortably beyond your working years, and long-term planning is key. Personal financial planning needs to be a priority in your life; right along with your health, family, relationships and emotional well-being.

Retirement security can be elusive and many women don’t focus on this key part of their longevity until they are near retirement age. Consider your own situation, recognize the link between the decisions you’re making today and their impact on your long term financial security, and take care of yourself too!

Find a financial advisor that you trust has your best interest at heart, and join the crowd of ladies that can say, “I’m glad I did!”

Looking for an advisor who is responsive to women’s issues and puts your best interests first?

Let’s talk!