Facts you need to know about women and retirement
Why retirement planning differs for men and women and how women can narrow the retirement savings gap.
Women often face unique challenges when it comes to planning for retirement. As a result, many find they haven't saved enough to support the kind of retirement they envision. But these challenges can easily be overcome with the proper support, resources and planning.
Here are five facts about women and retirement, along with some tips for how women can narrow the retirement savings gap:
1. Women tend to earn less than men
For every dollar men earn, women only earn about $0.84, leaving them with less money to put aside for retirement. Over an entire career, that difference can really add up.
Tip: The key is to start saving for retirement as early as possible. Women should explore all retirement savings options such as a traditional IRA or a Roth IRA in addition to any employer-sponsored retirement plans that might be available.
2. Women generally live longer than men
On average, women live about five years longer than men. This means they'll likely spend a few more years in retirement than men and that they will need to accumulate more in the way of retirement savings to support them.
Tip: Women should consider working longer if they can. This will enable them to accumulate more savings.
3. Women may have more gaps in their career than men
Even though this trend is shifting, women are more likely than men to step away from the workforce to take care of family members. These gaps in employment limit the opportunities women may have to save for retirement through an employer-sponsored plan.
Tip: During gap years, if married and filing jointly, women may still be able to contribute to an IRA on the basis of their spouse's earnings through a spousal IRA.
4. Women tend to be more risk-averse than men
When it comes to women and investing, they are more likely to be risk-averse, which can sometimes limit the long-term growth potential of their retirement savings.
Tip: Women shouldn't be afraid to seek advice from a financial professional because they can help develop a needs-based retirement planning approach and develop a well-diversified retirement savings plan.
5. Women generally retire before men
In the U.S., the average retirement age for women is 63 and for men it's 65. While two years may not seem like a big difference, it can create some significant challenges for women in retirement. One of those challenges comes from the fact that if women are retiring sooner than men, then they won't have as much time to save for retirement. Additionally, since women are retiring sooner, they'll also have to start taking withdraws from their retirement savings sooner.
Tip: Prior to retiring, it's important for women to develop a well-thought-out retirement budget that will last, and/or consider working part time during retirement.
A variety of factors can result in women saving less for retirement than men, but starting early and consulting with a financial professional can help women take control of their financial future.