March is Women’s History Month, a time to celebrate the contributions and achievements of women throughout history. However, it’s also a time to recognize the unique challenges that women face in various aspects of life, including retirement planning.
Retirement planning is a crucial aspect of personal finance. It involves setting aside money during your working years to support yourself in your golden years. However, women face unique challenges when it comes to saving for and entering retirement.
Women Earn Less Than Men
One of the primary challenges women face is the gender pay gap. On average, women earn less than men, which means they have less money to save for retirement. According to a recent study by the National Institute on Retirement Security, women are 80% more likely than men to be living in poverty at age 65 or older*. This is because women tend to work in lower-paying industries and take time off from work to care for children or elderly family members, which can impact their earning potential.
Women Have a Longer Life ExpectancyÂ
Another challenge women face is the longer life expectancy. Women typically live longer than men, which means they need to save more money to support themselves during their retirement years. However, because women tend to earn less than men, they often have less money to save.
Women Typically Care for Family
Additionally, women are more likely to take on the role of caregiver, which can impact their ability to save for retirement. According to the AARP, women are more likely than men to provide unpaid care for a family member, which can lead to lost income and benefits**. Additionally, caregiving can be emotionally and physically draining, which can make it difficult for women to focus on their retirement planning.
Tips to Overcome These Challenges
So, what can women do to overcome these challenges and better prepare for retirement? Here are a few tips:
- Start saving early: The earlier you start saving for retirement, the more time your money has to potentially grow. Even if you can only contribute a small amount each month, it can make a big difference over time.
- Maximize your retirement contributions: Take advantage of any employer-sponsored retirement plans, such as a 401(k) or IRA, and contribute as much as you can. If your employer offers a matching contribution, be sure to contribute enough to receive the full match
- Consider working longer: Working longer can help you save more money for retirement and delay the need to draw down your savings. It can also increase your Social Security benefits, as your benefit amount is based on your highest 35 years of earnings.
- Seek professional advice: A financial professional can help you create a retirement plan that takes into account your unique circumstances and goals.
Women’s History Month is a time to celebrate the contributions of women throughout history, but it’s also a time to recognize the unique challenges that women face when it comes to saving for and entering retirement. By taking steps to overcome these challenges, women can better prepare for a secure and comfortable retirement.
Sources
*Â National Institute on Retirement Security. (March 2016). Shortchanged in Retirement: Continuing Challenges to Women’s Financial Future. https://www.nirsonline.org/wp-content/uploads/2016/03/NIRS-shortchanged-in-retirement-women.pdf
**Â AARP Public Policy Institute. (November 2019). Understanding the Impact of Family Caregiving on Work. https://www.aarp.org/ppi/info-2019/understanding-the-impact-of-family-caregiving-on-work.html
