Planning for retirement is difficult for everyone. Women, however, have their own unique set of challenges. Statistically speaking, with lower wages, lower investment rates, unique insurance needs, and a longer life expectancy, planning needs to be done thoughtfully. Understanding each woman’s unique challenges is necessary in creating a successful retirement plan.
What Women Should Think About When Planning for Retirement
When planning for retirement, women have different needs. More often than not, the needs are complex and challenging at times.
The good news is there is a lot you can do to help overcome these factors! Just make sure you participate, early and often, in your retirement planning. The way to do that is:
Education – Start learning about all things surrounding your financial future. We spend more time researching the restaurants we eat in, than how best to prepare for our retirement. There are many sites that offer great information. EP Wealth Advisors offers several webinars and blogs on basic financial concepts.
Communication – Talk with your partner or spouse. Discussions about money and finances can be awkward at first, but you need to act as a team in determining how your money is spent and what it’s being saved for. Don’t leave this task to just one of you. Lack of communication can cause relationship issues down the line, and you'll want to have been a part of the financial decisions from the start.
Work with a trusted professional – We don’t build our own houses or perform our own surgeries. The best retirement planning is a team effort that includes a professional who has earned your trust and empowers you to ask questions and participate in your plan.
After taking in the action above, let’s look at four main considerations to keep in mind while planning for retirement:
1. Life expectancy
According to the Social Security Administration, a man who reaches 65 today will live to be 84, on average, while a woman who reaches 65 will live to be 86.5. However, those are just averages. It is estimated that women are twice as likely to celebrate their 100th birthday. That’s a big deal!
Every woman’s retirement planning should take into account this longer life expectancy. Don’t you want to live comfortably into your 90s ... or triple digits? Your financial plans should take into account life expectancy
2. Income earnings
As you may know all too well, women, on average, make less than men. According to one study, full-time female professionals earned 82 cents on every dollar a man made in 2022. Because of this statistic’s potential impact on the retirement planning process for women, you may have to work past the standard retirement age to amass the wealth you need to meet your financial goals.
3. Investing style
So what is the investing gap, and why does it matter for women, specifically?
For starters, men contribute 32 percent more to their investment accounts than women do. And while 53 percent of men choose the most aggressive investment plans, only 38 percent of women do. This can leave a gap in the potential income women see from their investment accounts.
What’s more, women keep 68 percent of their portfolios in cash. For men, that number drops to 59 percent. If this is true for you, not only can it make your assets more susceptible to inflation, but it also prevents them from earning the potential benefit of investing in the market. Although some cash accounts also accrue interest, they do so at a much slower pace with current interest rates.
4. Insurance and healthcare
Since women live longer than men, their healthcare tends to cost more in retirement. A recent study by Fidelity found that women pay an average of $147,000 on healthcare during retirement, while men pay $133,000; these figures don’t include long-term care, either.
As you plan for retirement, you might need to consider what kinds of illnesses run in your family, how Medicare and Medicaid might factor into your retirement plan, and who’s going to take care of you as you age.
How EP Wealth Advisors Can Help You Prepare for Retirement
As a fiduciary, EP Wealth Advisors believes that personalized advice is the cornerstone to making a positive impact on people’s lives. We also believe that women have been underserved historically by financial advisors.
As a firm, we desire to see women achieve financial independence, enjoy rewarding careers, and prepare for a comfortable retirement. We launched an Investing in Women Initiative, which is designed to help women succeed by encouraging them to openly discuss the financial issues that impact their lives the most.
The initiative also focuses on improving the communities around us through education and philanthropic outreach. Since launching the initiative in 2016, we’ve given hundreds of presentations on financial literacy and careers in finance at local schools. We’ve also spoken at several conferences sponsored by organizations such as Charles Schwab, the Financial Planning Association, and Financial Advisor magazine.
Women tend to see investing as a means to an end and tie their money to safety and security for themselves and their families. The earlier you learn about investing and take an active role with your partner and a trusted advisor, the better off you will be long term, especially if you find yourself faced with making all of the financial decisions on your own. We are here to help, so please contact us if you would like to take that next step to invest in your future.