From potentially fewer years in the workforce to a longer life expectancy, there are unique challenges women encounter that can affect their ability to work toward their retirement saving goals.
Accounting for these challenges in your financial plan can help you approach retirement with confidence.
Quite simply, women now earn, control and inherit more money and assets than ever before.
Women now earn, control and inherit more money and assets than ever before.
Even as women gain more control and confidence over their finances, they continue to face challenges in saving for retirement.
Statistics show that 23% of adults in the U.S. are part of the “sandwich generation,” squeezed between the competing financial, physical and emotional needs of children and aging parents.7
Women are more likely to take on the primary responsibility of caring for children or aging relatives—going in and out of the workplace or sometimes having to make the difficult decision to leave work altogether.
Leaving work for a time and putting your career on hold can potentially move you off a promotion track. It can also mean a loss of benefits or a 401(k) employer matching contribution. On the other hand, choosing to stay home may save your family money that would otherwise be spent on outside care.
These realities come with a myriad of trade-offs, which in turn can impact saving for retirement. Read more about what to consider before leaving the workforce.
On average, according to the U.S. Bureau of Labor Statistics, women earn just 82 cents for every dollar earned by a man.8 Over the course of a person’s work life, this can add up to a loss of more than $590,000 in income earned by a woman.9 The gap is even wider for women of color.
While women also engage with their money less than men, the pay gap plays a large part in why women face such significant financial challenges, particularly in saving for retirement.
Women generally 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.10
As a result, your money may need to last for 20-30 years longer in retirement than previous generations. 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.
One of the most critical aspects of retirement planning is to realistically assess the potential of future healthcare costs.
The average woman faces an annual cost of $16,992 for healthcare expenses at age 65. By age 85, the cost doubles to $34,300 per year.11 These costs are only likely to go higher. By one estimate, the cost of healthcare will rise at an annual rate of 5.5% over the 10-year period ending in 2027,12 which generally exceeds the broader inflation rate experienced in recent years.
While you become eligible for healthcare coverage under Medicare at age 65, it’s important to remember these important facts:
Find out if you’re ready for healthcare costs in retirement.
When considering your retirement savings strategy, it’s important to account for the challenges you may face on the way to and in retirement.
Learn how we can help you clarify your vision and plan for retirement.
A comprehensive financial plan can help you approach your retirement with confidence.
Three tips on how to keep working toward your financial goals while supporting your children and aging parents.