Helping Women Prepare For Retirement

Everyone’s financial plan is different. Depending on whether you are a man or a woman, your retirement plans may be slightly more different. In fact, women may have a few disadvantages when it comes to saving for retirement. A recent study published by Financial Finesse found that women were closing the retirement savings gap rapidly; however, they still face many disadvantages when it comes to retirement savings.

Many financial experts say that women are facing a few disadvantages regarding retirement. Among these: longer lifespans, gender pay gap and the amount of time women spend in the workforce are at the top of the retirement disadvantage list. In this article, we’ll dig a little deeper into the reasons hindering women’s retirement savings and provide tips on how women – and men – can begin putting more money toward their future.

Women Earn Less Money.

Like it or not, it’s a sad fact that women are still earning less money than men. Many reasons are cited for this, however, according to the White House, women who work full time are earning 77{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} of what their male counterparts are earning in the workforce. A study conducted by the Pew Research Center found that the gap is not quite so large; in fact, according to their research, women earn 84{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} of what men earn. For younger women entering the workforce, women are earning 93{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} of what men earn.

So the pay gap isn’t as drastic as it once was, but either way you slice it, it’s still present.

We can classify this as a drastic reason for why women aren’t saving enough for retirement. Less income coming in means that there is less money to save.

So: how can women overcome this obstacle to retirement saving? By focusing on earning more. Despite the common belief, women aren’t less ambitious than their male counterparts. In fact, in a study conducted by LeanIn.org and McKinsey & Co., showed that 78{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} of women and 75{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} of men said they’d like to be promoted. The lack of promotions comes from holding bosses accountable and a need to eliminate a stagnant middle ground in employment.  

According to The Wall Street Journal, one way to do this is to create a flexible work environment and to change the face of traditional work environments in order to strike a balance between work and home life – a balance that is beneficial to both men and women.

In the meantime, according to Barbara Stanny, author of “Overcoming Underearning”, women should start focusing on saying yes to lucrative opportunities that could boost earnings.

Women Are Conservative Spenders.

In general, women tend to be more risk-averse than men when it comes to how their funds are allocated. Generally, women will shy away from putting their money into risky investments. Such as the stock market, and instead choose to use investment tools that do not lose or gain much money.

The good news is that when women invest in IRAs and 401(k) accounts, this risk aversion comes in handy. This is because women tend to initiate less trades, which mean they do not face lowered returns.

The downside to this is  that sometimes high risk comes with high rewards. One way to overcome this savings block is to speak to a financial adviser before deciding how to invest your retirement funds. Diversifying your portfolio is a great way to boost savings, but some investment choices may not be right for your long-term financial strategy.

Women Prepare For Retirement and Spend Less Time Working.

Many women will take time off of work to spend raising  children or caring for family members, leaving them woefully under prepared for retirement. This is because many women leave during their prime income earning years, when promotions and raises are typically earned.

Additionally, the more time taken away from work means less money is funneled into a 401(k). This is due to the fact that many employers and companies have a vesting period. This period typically requires that employees remain with the company for a certain period of time in order to keep employer-matched contributions to their pension plan.

So switching your job or leaving the workforce altogether means that women may be losing out on a large chunk of retirement funds.

Women Live Longer Lifespans.

Technology and medical breakthroughs have made it possible for humans to live longer and healthier lives, For women – who outlive men by an average of 5 to 10 years – this could spell trouble. Which is why their is a necessity and why women prepare for retirement.

Living longer is not a bad thing, obviously; however, a longer lifespan for women means that they may outlive their retirement funds. And it is important to note that a longer life does not always equate to a healthier life.

As we age, health naturally deteriorates and living longer may mean women face heftier long-term care and medical bills. Combine this with the fact that women are saving less and may outlive their retirement funds and living longer spells bad news for women and retirement.

Bottom Line

These retirement hurdles don’t have to be barriers. In fact, with the right financial adviser and a strong financial plan, women can turbo-charge their retirement savings. It’s simple a matter of smarter investing and saving. Give us a call today to see how we can help you boost your retirement savings.