A recent study showed that women were 15% less likely than men to have a written retirement plan in place. While retirement planning is important for everyone, women face specific obstacles that make it even more important for them to save. Knowing these challenges now can help you plan ahead and have a more secure financial future.
It’s no secret that women and men often have very different life experiences. However, the impact these different life experiences can have on retirement and retirement savings is discussed much less.
1. The retirement paradox
Women often experience a gender gap in both pay and life expectancy. While many are paid less than men, women will, on average, live five years longer than men. Many people believe they also remain healthy for longer. The average woman retires two years earlier than her male counterparts. Women often take their retirement early in order to take care of their spouse. Overall, a longer retirement means that it is imperative that women plan ahead, creating an effective plan is an important step in the retirement planning process.
Having a long life and a long retirement is truly a blessing, but without the proper planning, it can quickly turn into a nightmare. The thought of running out of money before the end of your life can be frightening, but a proper plan will help mitigate any risk so you can spend your retirement worry-free.
One way to avoid this obstacle is to be mindful of your life expectancy. With medical advancements and current technology, many women are living to 100 or beyond. It’s expected that the first person to live to be 150 years old has already been born. When forming your retirement plan, it’s absolutely crucial that you take these trends into account. To understand how much you’ll need to save, you will need to save you need to start by estimating the length of your retirement, which will depend on how many years you expect to live. Start with when you want to retire and then estimate how long it will last. Be sure not to sell your longevity short, it’s better to overestimate than underestimate!
2. The cost of caregiving
Caring for your family, whether for children or for parents, is incredibly rewarding but caregiving doesn’t come without its challenges. Women’s careers are more often interrupted by parenthood than men. Studies show that 41% of mothers say that being a working parent has made it harder to advance their careers, compared to just 20% of working fathers. To make matters worse, one in three mothers takes on less demanding work after having their child-̶ resulting in lower pay.
After years of caring for their children, it’s also common for women to take on the role of caregiver for aging parents. The demands of this life phase can be emotionally and financially exhausting. The average caregiver spends $7,000 per year on their care recipient, plus however much time is invested in caregiving. The average caregiver is a woman who works outside the home and provides 20 hours a week of care to her parent. Working a full-time, 40-hour week plus 20 hours of caregiving is enough to exhaust anyone very quickly, and often leave little room to think about how their retirement is being affected.
The financial strain women face from caring for children and the elderly can negatively impact retirement savings. Women often have less time to save for their retirement by being out of the workforce for longer than men. It is important to recognize this obstacle, save more when you are able, and plan ahead.
While these obstacles make it harder for women to thrive in retirement, knowing the facts early can help you start to plan ahead. Every woman deserves to feel safe knowing they have a long, happy, and relaxing retirement waiting for them. Start planning today and learn about how to adapt your plan to help limit the long-term impacts of all aspects of the gender gap.
It may seem alarming that there are so many factors involved in retirement, but by knowing the risks, you are the one in the driver’s seat. You have the ability to avoid these pitfalls and set yourself up for a great retirement by planning ahead. We specialize in helping women retire comfortably. If you have any questions or would like to set up an appointment with us at Wealth to Women, call (716) 906-8121.
Women and Financial Wellness: Beyond the Bottom Line, Merrill Lynch, and New Wave Study. 2018