- Women face different challenges in retirement saving than men.
- A majority of women fear they will not be able to ever fully retire.
- Helping women create a strategy for saving and setbacks can get them on the right track.
Did you know 54% of women plan to work in retirement? Two of the top reasons women give for working past age 65, or in retirement, are that they want the income and they can’t afford to retire because they haven't saved enough.1
Women face different challenges in saving for retirement than their male counterparts. They tend to make less income; leave jobs for caregiving; and to top all off, live longer than men, so they need to save more for a longer retirement and healthcare costs. You can learn more about those challenges in our previous article. But rest assured: There are ways you can help women map out a strategy so they feel they can fully retire at the age they want.
Making a plan
Have your client set a target retirement age and create an outline of all the expenses they think they’ll have for daily living and those dream items such as travel and hobbies. They’ll likely need your help with the risk factors such as inflation, taxes, and market volatility.
If they’re coming up short on funds (women traditionally make 80 cents to every dollar a man makes2), suggest ways they can close the gap with passive income, smart investing, or a side job. The goal is to make sure they can fully retire comfortably at some point.
Help them know their benefits
Educate your client on how much Social Security to expect by having them sign on to ssa.gov. They should also check that all of their employment is accounted for. Does your client have a pension, 401(k), or other retirement plan? If they aren’t sure, encourage them to reach out to past employers and ask if they left any benefits behind.
Don’t forget the spouse
Women often don’t know what their spouse plans to do in retirement. Couples need to make a retirement plan together. What age do they want to retire and what do they envision doing in retirement? Point out gaps that occur if one of them wants to retire early, such as health insurance, receiving lower benefit amounts, less income to put into saving, and more years to cover in retirement. They’ll need your help with a strategy to accommodate potential setbacks they may not have thought of.
Does your client have a family member in need of care — such as a baby or an elderly parent? Your female clients may assume they would be the ones to take that on. Help them review options for the financial impact of caregiving. Let them know how dropping out of the workforce could affect their retirement savings by cutting off benefits received from an employer, such as a 401(k) and health insurance. Let them know there are alternative ways to hire affordable care for children and set parents up financially to hire care through long term care insurance and annuities.
Forced early retirement
Caregiving, a sudden illness, or a layoff could force your client to leave the workforce earlier than expected. Help them create a backup plan to stretch their savings and keep income coming in, if needed. What jobs can they do from home if they can’t go into a workplace full time any longer? Could they downsize to a smaller home or move to a city with a cheaper cost of living to make their retirement savings stretch further? Would they consider a housemate or rent a spare room to share expenses if they are divorced or widowed?
Create a plan, review regularly
By working with your client, you can help them get a strategy down in writing and adjust where necessary with annual reviews. There’s no reason your female clients should feel they can never fully retire when they have a strong strategy in place to get them there.
Check out our infographic to map your way to a fulfilling retirement.
Things to Consider:
- Women need a way to make up for challenges such as lower incomes and longevity.
- Taking on the role of caretaker could hurt their retirement saving. There are alternatives.
- A backup plan can mean the difference between a forced early retirement and a comfortable one.
1 “Here and Now: How Women Can Take Control of Their Retirement,” The Nonprofit Transamerica Center for Retirement Studies, 2018
2 “6 Charts That Show the Glaring Gap Between Men and Women’s Salaries,” Business Insider, April 2019