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Men, women and retirement: How planning differs

Retirement planning isn’t the same for men and women. A variety of factors can lead to a retirement savings gap for women. Here’s how to plan.

Man and woman retirement planning over a laptop.

Women face distinct challenges when saving for retirement. In general, they earn less than men and spend more time away from the workforce caring for children or aging parents. They are also likely to pay more in healthcare costs because they outlive men. Since women tend to live longer than men, they may need more money in retirement. Planning can help address the retirement gap. Here are six tips to remember.

Account for any retirement saving gaps and differences

Some women are able to pause their careers when they have children. But this may mean that they no longer have an automatic way to save through a company-sponsored retirement plan. There are options for those who may not be employed, even for a short time. For example, if you’re planning to step away from your career, and you file taxes jointly with your spouse, you may be able to contribute to a Traditional IRA or Roth IRA to continue saving for retirement.

Start as early as you can and save more

Even though women begin contributing to plans at the same age as men, on average, they generate roughly 83% of the retirement income. You can make up for these shortages. If you get a raise, you can set aside part, or all, of it as an automatic contribution to your retirement plan. You can also begin saving for retirement as soon as possible. Even a small amount put into a retirement account can grow exponentially over the years. Investing an extra $50 a month in retirement investments between ages 20 and 67 could boost your nest egg by $83,000.

Consider your retirement approach

In addition to earning less on average, women are more likely to be risk-averse in their investing. It can be difficult to align goals and needs and learn how women can narrow the retirement savings gap. It may be helpful to consider consulting a financial professional for help crafting a plan that takes advantage of your earning and investment potential. Many financial professionals offer services specific to the particular retirement gaps that women may face.

Diversify your retirement savings

Even if you consult with a financial professional, it’s also helpful to understand the tax advantages of different savings vehicles and to diversify your savings so that you have a wide range of income-generating tools in retirement. For example, with a Traditional IRA, your contributions may be tax-deducible right now, while with a Roth IRA, your earnings are generally not taxed.

Keep tabs on your earnings

There are resources available that can help you determine if what you are earning lines up with your education and experience. Do your research and use it to help you negotiate for advancement, not just in income level but in benefits such as company contributions to retirement plans.

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.

Neither State Farm nor its agents provide tax or legal advice.

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