Women face additional challenges when planning for retirement. By being aware of these concerns, women can take steps to overcome them.
1. Longer Retirement
Women usually have a longer retirement than men because they outlive their husbands by about five years, according to the National Center for Health. This means women must save more because they will have more years in retirement due to their increased lifespans.
As people age, they typically reduce the ratio of stocks to bonds in their investments; women should discuss with their financial advisor how much of their resources should stay in stock investments during retirement to diminish the effect of inflation.
2. A Woman’s Retirement Is More Expensive
Because women live longer, it is wise to expect higher expenses such as additional medical costs, or the increased possibility of having to stay in a nursing home, an assisted living community, or employing home-care which can be very expensive. While Medicare may cover some of these expenses, now is a good time to look into long-term care insurance or other forms of insurance protection.
3. Women Earn Less so They Must Save More
It is well-known that women do not earn as much as their male counterparts. According to the U.S. Census Bureau, a woman earns about 80 cents for every $1 a man earns. In addition, women sometimes miss some of their working years caring for children. This significant discrepancy in earnings translates to less savings. Women can, however, catch up by increasing their contributions to their 401(k) and using automatic deposits from their paychecks. Contributing additional funds to an IRA is another way to speed up savings.
4. Social Security Contributions Are Less
Since women earn less with smaller salaries and less years in the workplace, their SS contributions are also smaller. The Social Security Administration reported in 2015 that women average approximately 20% less in social security benefits than men. Care must be taken when planning Social Security payouts so these benefits can be maximized. If possible, this planning should be done in conjunction with their spouse so survivor benefits can be coordinated to the best advantage.
We hope this article about retirement tips for women was informative. Synergy Financial Management can help with your retirement planning…please contact us so we can discuss ways to increase your personal wealth and enhance your retirement. Thank you!
Joseph M. Maas, CFA, CVA, ABAR, CM&AA, CFP®, ChFC, CLU®, MSFS, CCIM
Synergy Financial Management, LLC
701 Fifth Avenue Suite 3520
Seattle, Washington 98104