Despite significant progress in recent years, many women find themselves behind where they need to be when it comes to saving for retirement and achieving other financial goals.
Women face distinct challenges and opportunities in financial planning, which can profoundly impact their long-term financial security. Despite significant progress in recent years, many women find themselves behind where they need to be when it comes to saving for retirement and achieving other financial goals.
This shortfall stems from several factors—for instance, women tend to live longer, requiring additional resources for extended retirement expenses and rising healthcare costs. Many women also experience career interruptions for caregiving, face the persistent gender pay gap, and often manage finances independently later in life due to divorce or widowhood. There are also cultural considerations that differ across the world, but we see many American women relegated to the back seat in the management of home finances.
While these challenges may seem daunting, they highlight the vital need for education and proactive financial planning. By addressing these hurdles directly and taking advantage of available opportunities, you can create a financial strategy that is fully aligned with your goals.
The gender pay gap continues to pose a significant financial challenge for women, with recent data from the Pew Research Center showing that women earn approximately 82 cents for every dollar earned by men. This is driven by several factors, including occupational segregation, unequal opportunities in hiring and promotion, and the financial penalties women often face for caregiving responsibilities.
Over the course of a career, this disparity in pay can add up to hundreds of thousands of dollars in lost earnings. To counteract these challenges, consider adopting the following strategies to help increase your earning potential and possibly reduce the impact of the pay gap:
Keeping a detailed record of your accomplishments, consistently updating your skills, and strategically timing job transitions are also highly effective strategies for advancing your career and narrowing the income gap. These proactive steps not only enhance your professional value but also position you for greater opportunities and increased earning potential.
According to Fidelity’s 2024 Women & Investing Study, women’s participation in the stock market surged by 18% between 2023 and 2024—a significant step forward in closing the gender investment gap. Furthermore, a 2021 analysis of 5 million Fidelity customers revealed that women who invest tend to outperform their male counterparts by an average of 0.4% annually over a 10-year period.
Wells Fargo’s 2023 Women and Investing Report sheds light on why women often excel as investors:
Moreover, Wells Fargo’s research shows that women trade 27% less frequently than men—a behavior attributed in part to lower confidence, which reduces transaction costs and preserves long-term returns.
Despite these strengths, a gender investment gap persists, with many women remaining under-invested relative to their long-term financial goals. For women who may feel uncertain or lack confidence in managing investments independently, these insights underscore the critical role of financial education and professional guidance when it comes to developing wealth-building strategies.
A recent survey from Prudential Financial revealed that American women aged 55 to 75 have saved just one-third of what men have saved for retirement. While men report a median savings of $157,000, women have saved an average of only $50,000.
This stark savings gap highlights a crucial need for women to focus on building their retirement savings, especially during peak earning years. Consider the following strategies:
Be sure to review your savings plan each year to keep it aligned with your progress and long-term goals. Regularly reassessing your approach helps you stay on course and adapt to life’s inevitable changes.
In many households, particularly among older generations, financial responsibilities have been divided based on traditional gender roles, with men as the breadwinners and women taking on the role of homemakers. Of course, this is a broad generalization, as relationships come in all forms. However, we do see a high percentage of women in the 70-90 age group who have fulfilled this role in the home.
The result is often that:
This division of responsibilities can make for a peaceful home life, with each person sharing the proverbial load. However, over time, the results can be problematic, as some women may not have had the opportunity to develop confidence in their financial decision-making.
"There are intelligent women who are not aware of what they are capable of, and capable women who have wanted to learn and participate but have not been included in the financial planning process," says EP Wealth's Jessica Ellyson, CFP®. "If their partner becomes incapacitated or passes away, they may be left with a web of accounts and decisions they do not understand and did not have a voice in making."
For this reason, we encourage all women, and all individuals, to participate in their financial lives to the extent that they can make prudent decisions for themselves. Having a basic understanding of investments, estate planning documents, and the role of professional advisors can help provide confidence when navigating financial responsibilities —whether independently or alongside a partner.
According to the Social Security Administration, women reaching age 65 in 2023 are expected to live an average of 20.7 additional years, compared to 18.1 years for men. This increased life expectancy underscores the importance of understanding how Social Security benefits work and how they contribute to your retirement income.
Consider the following tips to help you navigate your Social Security benefits effectively:
By taking these steps and planning strategically, you can make the most of your Social Security benefits, helping to support your needs throughout retirement.
According to Morningstar, 90% of women will manage assets independently at some point in their lives, often due to divorce or the loss of a spouse. Preparing for this reality is essential to maintain your financial independence when the time comes.
During a divorce, it’s important to have a clear and comprehensive understanding of your marital assets. These typically include retirement accounts, investments, real estate, and business interests.
Be aware that retirement accounts, often a substantial portion of marital wealth, require careful handling. Their division is governed by specific rules and typically requires a Qualified Domestic Relations Order (QDRO).
It’s equally critical to review and update insurance policies and beneficiary designations to reflect your new circumstances. This includes aligning life insurance, health insurance, and long-term care policies with your updated financial and personal needs.
Preparing for widowhood requires proactive organization and clear communication to manage the financial aspects of a difficult transition.
Start by documenting all financial accounts, passwords, and important paperwork in a secure and accessible location. Both spouses should have full access to essential information, including investment accounts, insurance policies, and safe deposit boxes, to potentially avoid complications later.
Taking time to understand insurance claim procedures and account management before they’re needed can alleviate additional stress during an emotionally overwhelming period. By addressing these preparations in advance, you can plan for a smoother transition and maintain control over financial matters.
According to McKinsey, women are projected to control more than two-thirds of the wealth in the United States by 2030. This shift stresses the importance of women engaging in comprehensive estate planning.
A well-crafted estate plan provides clarity for financial and healthcare decisions while intending to minimize family conflicts and legal complications. Here are some components of a comprehensive estate plan:
Events such as marriage, divorce, the birth of children, or significant changes in asset ownership often require adjustments to your estate plan. Regularly review and update your documents so that they reflect your current circumstances, relationships, and wishes.
Proactive planning is an important step towards the goal of long-term financial independence. By taking charge of your financial future today, you can cultivate the confidence needed to navigate life's journey with clarity and resilience.
At EP Wealth, we’re passionate about empowering women to thrive in fulfilling careers and plan for a retirement that aligns with their dreams. Whether you're just beginning your financial journey or looking to refine your strategy, we’re here to guide you every step of the way. Contact us today to take the next step in investing in your future.
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