Women, wealth and retirement: The financial landscape

Women and Wealth


There was a time when the long-term financial security of women was closely linked to that of their husbands or other family members. In certain situations, that may still be true, but for most women, the reality is that they need to be in a position to manage their own financial affairs, immediately or later in life.

In addition, women often face special challenges when it comes to preparing for financial security in retirement. As a woman starts considering her financial life management plan, it is important to have a clear perspective on where she stands and the challenges ahead.

The growing financial power of women

Women play a critical role in the financial decision-making process for many households. By one estimate, women control more than 50% of personal wealth.1 What’s more notable is that their level of control will expand to approximately two-thirds of U.S. wealth by 2030.2

Quite simply, women now earn, control and inherit more money and assets than ever before. In most households, whether in the U.S. or around the globe, women take responsibility for the vast majority of purchasing decisions.3

In addition, women make up 47% of the U.S. workforce4 and now earn the majority of higher education degrees. According to recent statistics, women account for 57% of bachelor degrees, 59% of Master’s degrees and 53% of Doctor’s degrees.5

In short, women are taking on more financial responsibility earlier in their lives. At the same time, according to current life expectancy data from the U.S. Department of Health and Human Services, women outlive men by nearly five years. So many women can also expect to assume control of the estate they shared with their spouse.

Women now earn, control and inherit more money and assets than ever before.

The importance of saving

Even with the increasing control over financial matters that women have gained, a significant challenge persists – the pay gap in comparison to men. On average, according to the U.S. Bureau of Labor Statistics, women earn just 82 cents for every dollar earned by a man. Over the course of your work life, this can add up to, on average, $418,000 less in income earned by a woman.6 It explains in large part why women face such significant financial challenges, particularly in preparing for retirement.

Most Americans will depend on Social Security to play an important role in generating income in retirement. The average Social Security benefit received by women age 65 and older was $13,150, compared to $17,106 for men.7

A key to achieving a financially successful retirement is for women to begin saving as early as possible in life. The reason is simple – the power of compound interest. The longer your money can grow, the more wealth you can accumulate before you retire. Key steps include:

  • Capitalizing on the opportunity to save pre-tax dollars in an employer-sponsored workplace plan such as a 401(k). If your employer offers matching contributions, try to defer enough income into the plan to capitalize on the full matching amount.
  • Leveraging SEP or SIMPLE plans as a way to save money in a tax-advantaged way for retirement if you are self-employed.
  • Making regular contributions to IRAs or other tax-advantaged savings vehicles to help supplement your income in retirement.

Major obstacles to retirement security

On average, women live longer than men, and are enjoying longer lifespans than at any time in history. A woman who reaches age 65, on average, can expect to live another 20 years, and one-third of women age 70 can expect to live into their 90s.8 This means you are likely to experience a much longer life in retirement than those in preceding generations.

As a result, your money may need to last for two-to-three decades or longer in retirement. Even with modest annual inflation of 3%, daily living expenses such as housing costs, utilities and household expenses, will double in less than 25 years.

The realities of a potentially lengthy retirement and increasing expenses over time need to be accounted for as you assess your retirement savings strategy.

The biggest cost concern – health care

Even if overall living costs are rising at a modest rate, the greater concern for retirees is that health care costs are expected to rise much more rapidly. You need to prepare for the fact that by age 65, health care expenses play a much more prominent role in your financial life. The average woman faces an annual cost of $16,857 for health care expenses at age 65. By age 85, the cost doubles to $33,662 per year.8

These costs are only likely to go higher. By one estimate, the cost of health care will rise at an annual rate of 5.5% over the ten-year period ending in 2026.9 This dwarfs the broader inflation rate we’ve experienced in recent years.

While you become eligible for health care coverage under Medicare at age 65, it is important to remember these important facts:

  • Some aspects of Medicare require premium payments.
  • Medicare does not cover all typical medical expenses, and you may want to consider purchasing supplemental health insurance in addition to Medicare.
  • Most forms of Medicare coverage don’t cover dental work, eyeglasses or expenses related to stays in a long-term care facility.

As you assess your expenses in retirement, be sure to account for the significant challenge that health care costs present.

Let’s get started

The information provided here is designed to help you gain a full appreciation of the challenges you face as a woman in planning your retirement. The next step is to consider various factors that may come into play. Finally, you can gain peace of mind by putting a personalized financial life management plan into place.

Your Wealth Management professional can help you review where you stand and create a retirement plan that will put you on track to a financially secure future.