4 unique challenges for women and retirement saving

Women, money and influence

Quite simply, women now earn, control and inherit more money and assets than ever before.

  • Women make up 56 percent of the U.S. workforce.1
  • Thirty-one percent of all U.S. adults who are single, and 62 percent of single women are not looking to be in a relationship.2
  • Women control up to 80 percent of all household purchases in the U.S.3
  • Women are more likely to give to charitable organizations, and give higher amounts, than men.4
  • Women are set to inherit the largest share of family wealth when approximately $30 trillion will be passed on from spouses and aging parents.5
  • Women outlive men by an average of 5.1 years,6 and many can expect to assume control of the estate they shared with their spouse.

Even as women gain more control and confidence over their finances, they continue to face challenges in saving for retirement.

1. Finding balance between career and caregiving

Statistics show that 12 percent of parents 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. The COVID-19 pandemic highlighted this even further, with over 2.3 million women leaving the workforce in one year.8

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.

2. Minding the gender pay gap

On average, according to the U.S. Bureau of Labor Statistics, women earn just 82 cents for every dollar earned by a man.9 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.10 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.

3. Longer life expectancy

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.11

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

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 percent, daily living expenses such as housing costs, utilities and household expenses will double in less than 25 years.

4. Managing healthcare costs

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 $16,857 for healthcare expenses at age 65. By age 85, the cost doubles to $33,662 per year.12 These costs are only likely to go higher. By one estimate, the cost of healthcare will rise at an annual rate of 5.5 percent 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:

  • 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.

Find out if you’re ready for healthcare costs in retirement.

It’s time for a plan

When considering your retirement savings strategy, it’s important to account for the challenges you may face on the way to and in retirement.

These six retirement planning steps can help you approach your retirement with confidence.

1. Women in the labor force. The FRED Blog, March 8, 2021.

2. A profile of single Americans. Pew Research Center, August 20, 2020.

3. The Future is Female Consumption. The Transatlanticist, March 26, 2020.

4. “Giving while female: Women are more likely to donate to charities than men of equal means,” The Conversation, February 28, 2021.

5. “Women as the next wave of growth in US wealth management,” McKinsey & Company, July 29, 2020.

6. Life expectancy for men and women. WorldData.info, 2019.

7. More than one-in-ten U.S. parents are also caring for an adult. Pew Research Center, November 29, 2018.

8. “Lost jobs, less pay, no childcare: A year in the pandemic, women are not OK,” CNBC, March 1, 2021.

9. 5 Facts About the State of the Gender Pay Gap. U.S. Department of Labor Blog, March 19. 2021.

10. “Just How Bad Is the Gender Pay Gap? Brutal, When You Look at a Lifetime of Work,” Time, April 2019.

11. “What’s Your Retirement Number? No, Not Savings – Life Expectancy,” Rate.com.

12. National Health Expenditure Projections 2018-2027. Centers for Medicare and Medicaid Services.