Retirement planning for women: Secure your financial future

Retirement planning is something everyone should consider. But why is retirement planning especially important for women? While the ultimate goal of building a secure financial future may be the same, women face unique financial challenges that make retirement planning look different for them. By being aware of these difficulties, and learning how to deal with them, women can use this knowledge to help build a strong foundation for retirement. 

These are some examples of obstacles that can affect women’s retirement:

Although the gender pay gap has narrowed in the past decades, it still affects wealth accumulation for women. According to the National Women’s Law Center’s analysis of the U.S. Census Bureau data, women earn only 83 cents for every dollar men earn based on full-time, year-round workers.¹ This gap can be even wider when accounting for race, disability, sexual orientation, parental status, and age.¹ 

This gender pay disparity can leave women with comparatively less income, which can translate to less money that can be put aside towards savings and other investments after taking care of necessary monthly expenses. Lower salaries may also affect overall retirement funds. 

Women tend to outlive men. According to the Center for Disease Control (CDC), the national average life expectancy for women as of 2022 is 80.2 years compared to 74.8 years for men.² Since women live on average five years longer than men, this means they would need to make their retirement savings last longer than men.

Considering that women generally earn less money than men and also may need to plan for a longer retirement, it is important to think about retirement funds sooner than later, and another reason why retirement planning for women is crucial.

Compared to their male counterparts, women may often take bigger responsibilities as primary caregivers. Women may sometimes even take career breaks to provide care for children or elderly parents, for example. 

Taking a career break, or even part-time jobs for more flexibility, can also take a toll on retirement savings plans, as part-time jobs often don't have the same employee retirement savings plans, and not actively working means you are not contributing to an employer-sponsored retirement plan. This can have a negative effect on retirement plans for women, as spending less time in the workforce may reduce the total amount of money accumulated for retirement, especially in employer-sponsored retirement plans. 

Therefore, women may not only potentially face lower wages, but may also have less time than men to save for retirement.

Due to having a longer life expectancy, women must also prepare to finance healthcare costs and health-related expenses for longer than men do. According to the Retiree Health Cost Index, an average 65-year-old woman entering retirement is expected to pay $147,000 in healthcare over the course of her remaining lifetime, while an average 65-year-old man entering retirement is expected to pay only $128,000.³ While higher costs for women are largely due to longer life expectancy than men, women will have to factor these costs into their retirement savings as well.

Getting started with retirement planning early on can help to ensure you have enough funds accumulated for a comfortable retirement. Especially when it comes to women and retirement, being aware of these extra hurdles can help to make a more tailored approach to meeting your retirement savings goals. 

Here are some steps you can take towards establishing a well-rounded retirement plan:

It may be useful to understand how much you need for a comfortable retirement. Figuring out how much you need to retire comfortably can help you meet your savings goals for your retirement.

When creating a retirement budget, you may want to consider:

• Establishing your financial goals for retirement: How much do you need to save for retirement, and how much more would you need to retire comfortably? Online resources like retirement calculators can help you figure out an estimated number. Setting financial goals for retirement is important to ensure a secure financial future. 
• Estimating your Social Security benefits: Find out if the benefits you expect to receive from social security, pension plans, and other sources will be enough for your retirement. Are you aware of the full retirement age for Social Security to kick in? Can you expect any benefits if you become widowed or divorced?
• Costs of longer life expectancy: A longer life expectancy means your retirement funds will also need to last longer. It is also important to consider long-term care plans, and healthcare costs when establishing a retirement budget.  

Having a well-balanced retirement budget plan can help ensure financial security and financial longevity in the future.

Retirement savings plans, or retirement accounts, help provide financial security during retirement. 

Employer sponsored retirement plans, like 401(k)s, can benefit you as employers often match your contributions. These traditional retirement plans sometimes also require that you work a certain number of years at a company before you become “vested” and are able to receive your benefits. Your HR department can help you understand the vesting period and how much your employer is willing to match your contribution. 

If your job does not offer a retirement savings plan, you can also consider tax-advantaged retirement accounts like an IRA, Roth IRA, Simple IRA or SEP to make contributions. 

It is important to understand the benefits of each account, so you can decide what best fits your needs and will help to meet your retirement goals.

Acquiring knowledge on different saving and investing strategies is another tool that can benefit retirement planning for women. Savings and investment opportunities can provide a diversified portfolio for your retirement plan.

Savings accounts should be part of your retirement strategy, as they can help build your wealth. Having your cash savings in fixed-rate, high-interest accounts, like certificates of deposit, can help you take advantage of high interest rates and make more of your hard-earned cash — especially when interest and inflation rates are fluctuating.

Investment options such as stocks, bonds, and other assets can also contribute to a steady income for retirement — however, it is important to understand that such investment options also come with risk of losing money as they do not offer guaranteed returns. Therefore, you may want to carefully consider the risk-reward profile of investment options. Looking at where to invest your money for high returns can help you determine how much you are willing to risk in investment opportunities. 

Diversifying your extra cash in savings and investment options can help you have a passive income stream during your retirement. Creating an effective money-saving plan can help you meet your retirement savings goal.

Since life can sometimes take unexpected turns, you can also consider starting an emergency fund. This can help to provide a safety net in case of an emergency during your retirement. While a general rule of thumb can be having three to six months’ worth of living expenses saved, you can establish your own goals and budget how much to save for emergencies. Learning how to build a nest egg can help you be well-prepared for possible emergencies during your retirement.

Considering women have longer life expectancies, this means women in retirement may have higher health care costs to account for. Therefore, it may also be wise to set aside money for potential health care-related expenses. This can include saving for costs of prescription medications, long-term care or nursing homes, or even medical emergencies. One option to consider could be opening a health savings account (HSA), which allows you to set aside pre-tax funds for future medical expenses.

Another thing that may also go hand-in-hand with retirement planning for women is estate planning. While you shouldn’t wait until retirement age to start planning for retirement, estate planning is also something that should be done in advance. Retirement planning can be a big part of estate planning, so it may also give you a head start.

Estate planning is so much more than just creating a will and a trust, and can help women ensure they are in control of their assets and wealth. You may also want to consider appointing powers of attorney in the event of a medical emergency or accident that leaves you incapacitated and unable to make your own medical or financial decisions. It is also important to keep beneficiaries on your life insurance policy or retirement accounts up to date, to ensure your assets get passed on to their rightful heirs. 

Our guide to estate planning for women can help you get started with establishing a well-rounded estate plan.

It is never too early to start saving for retirement — especially when considering the extra hurdles women may face when planning for retirement. Start optimizing your savings strategy today to help finance a comfortable retirement in your future. The Raisin marketplace offers multiple high-yield savings products from banks and credit unions with competitive interest rates to maximize your savings while maintaining financial flexibility. Explore savings options with Raisin and start boosting your retirement savings.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

Sources

¹ https://nwlc.org/wp-content/uploads/2024/01/2025-Window-Into-the-Wage-Gap-Factsheet.pdf

² https://www.cdc.gov/nchs/fastats/life-expectancy.htm

³ https://www.milliman.com/en/insight/retiree-health-cost-index-2024