EP Wealth Vice President, Advisor, Susan Koe, CFP^®, shares why the retirement gap between women and men persists and key planning strategies that can help women approach retirement on their own terms.  

Women and Wealth: Closing the Retirement Gap

The retirement gap between women and men remains significant. On average, women retire with less savings and less income than men. At the same time, women tend to live longer, which means their retirement funds need to stretch further.

There are a number of reasons behind this gap, including career interruptions for caregiving and a persistent earnings disparity in many industries. While some encouraging progress has been made to close these gaps, the reality is that many women still feel that they are well behind on their retirement savings. This is something I hear regularly from women when they come to work with me as clients.

The good news is that with the right planning approach—one that looks holistically at the full financial picture—there are often more options available than people expect. Retirement planning that accounts for career breaks, takes advantage of catch-up strategies, and coordinates across investments, taxes, insurance, and cash flow can help women approach retirement on their own terms.

In this blog, I share practical strategies and perspectives that women at various life stages can consider as they plan for retirement. Some key topics I cover include:

• Why the retirement gap persists and where progress is being made
• Why starting early is the single most powerful retirement planning advantage
• How to plan for career breaks without losing momentum
• Why retirement planning should be holistic and personal—not focused only on investments
• Healthcare costs and long-term care as commonly overlooked factors
• Why financial planning is an ongoing process
• What to look for in a financial advisor 

Why the Retirement Gap Persists

The retirement gap is driven by several factors, whose effects can accumulate over time:

• Career interruptions for caregiving. Women are more likely to experience career interruptions, whether that's raising children or taking care of aging parents. Even short breaks from the workforce can have a significant impact on retirement savings, affecting both contributions and the compounding growth that those contributions would have generated over time.
• The earnings gap. Even today, many women earn less than their male counterparts over the course of their careers. Lower lifetime earnings can make it harder to save for retirement and often translate into lower Social Security benefits later in life. This gap appears to be closing, which is encouraging, but it remains a real factor.
• Prioritizing others' financial needs. I frequently see women put family members' financial needs—particularly children's education—ahead of their own retirement savings. I've had several conversations with clients who want to fund a child's or grandchild's education, where I've needed to say, "We've got to back up and consider your retirement first." The impulse comes from a generous place, but the reality is that while you can take out a loan for education, you can't take out a loan for retirement.

Encouraging Signs of Progress

While there is still work to be done to close the retirement gap, I'm seeing encouraging trends. Younger generations of women appear to be much more engaged in financial decision-making. From what I have seen, they're investing earlier, asking more questions about long-term planning, and taking ownership of their financial futures in a way that I find really promising.

I've had the opportunity to work with the adult daughters of some of my existing clients—young women who are just starting out in their careers and already asking questions like, "How much should I put in my 401(k)? How should it be invested?" That's been really rewarding for me, because making good financial choices at a young age can make a significant difference in long-term financial outcomes.

I'm also seeing more financial education happening at a younger age. My own children are taking personal finance classes in high school, and I think that's a positive shift that will have a lasting effect. The gap will continue to improve over time, but it's important for women to take ownership of their finances early on.

Start Early and Let Time Work for You

If there's one message I come back to again and again with clients, it's that time can be the most powerful asset in retirement planning.

The Compounding Advantage of Starting Young

The biggest mistake I see is people waiting until they're five years away from retirement to start thinking seriously about it. By that point, the window for building meaningful savings through compounding has narrowed considerably.

Even small contributions early in a career can make an enormous difference when they have decades to grow. It's more about time in the market than trying to time the market. The earlier you start contributing—even modestly—the more opportunity those dollars have to work for you over the long term.

Planning for Career Breaks

Career breaks for caregiving are a normal part of life, and retirement planning should account for them rather than treating them as setbacks. There are several ways to keep things moving forward.

If you know a break is coming, you may choose to contribute as much as possible before stepping away so your savings have a head start. If you have a spouse who is still working, spousal retirement contributions allow contributions to continue even while you're out of the workforce.

When you return to work, you can gradually increase your contributions to regain momentum. And for those over 50, catch-up contributions allow for additional savings each year beyond the standard limits.

The key is to plan for these transitions rather than letting them happen without a strategy in place.

Catch-Up Strategies for Women Who Feel Behind on Savings

Feeling behind on retirement savings can be incredibly common, and I want to acknowledge that the anxiety around it is real. But what I've found in working with clients in this situation is that the anxiety of not knowing where you stand is often worse than the reality.

For women who feel behind, the most important step is often getting a comprehensive financial plan in place. Time and again, I've seen with my clients that just knowing what you need to do eases much of that stress. When we put the numbers on paper and map out what steps are needed over the next several years to reach a goal, it replaces uncertainty with a clear path forward.

From a practical standpoint, catch-up contributions after age 50 are a valuable tool, and spousal retirement contributions can also help close the gap. But the plan itself is what provides the direction and the confidence that comes with it. 

Look at the Full Picture

One of the misconceptions I see is the idea that retirement planning is all about the investments. It's a critical piece, but it's one piece of a much larger picture.

Retirement Planning Is Personal and Goal-Based

Retirement looks different for everyone. Some of my clients want to travel the world. Others are content to stay home and volunteer a few days a week. Some want to own two homes. Others want to downsize and simplify. Those different visions require very different financial approaches.

A common misconception is that retirement is about hitting a certain age and then everything just kind of falls into place. In reality, there's a lot of planning that needs to go into it, and that planning should start with defining your personal goals. At EP Wealth, we take a goal-based approach to financial planning—you determine what your goals are, and then we work together to identify the steps needed to work toward them.

A Holistic Approach — Not Just Focusing on Investments

When we work with clients, we're looking at every aspect of their financial lives. That includes investments, but it also includes tax planning, estate planning, insurance planning, cash flow, and income strategy. All of these areas can tie together, and our philosophy is that they all should work in coordination to support your overall retirement goals.

Taking this kind of integrated approach can help identify opportunities and potential gaps that might be missed if you're looking at each area in isolation.

Healthcare Costs and Long-Term Care Are Often Overlooked

Healthcare costs are one of the areas I see clients overlook most often. These costs continue to rise and should be factored into any comprehensive financial plan.

We spend a significant amount of time helping clients estimate what healthcare might look like for them in the future, based on where they live, their current health, their family history, and their potential long-term care needs. It's an area where planning ahead can make a meaningful difference, especially since the costs involved can be substantial.

Stress Testing and Scenario Planning

We don't know what the markets are going to return. We don't know what inflation rates will be. We don't know what a client's health will look like at age 85 or 90. So rather than trying to predict the future, we stress test the plan.

That means running multiple scenarios can be helpful. For example, we might model what happens if a client enters long-term care at age 90 and lives there for five years, which could easily cost a million dollars. What does that do to the portfolio? We also model scenarios where the markets don't perform as expected. Can you still retire? Can you still meet your goals?

It's more of a risk assessment than a prediction. Some clients, based on family history, may have a better sense of what they might expect health-wise, but the goal is always to plan for a range of possibilities so that there are fewer surprises down the road.

The Risk of Being Too Conservative

One pattern I see is that women can sometimes be overly conservative with investments. For example, I had a client who kept all of her savings in cash for five years—meaning it wasn't invested in the market at all. She missed out on significant growth during that time, and it was a real setback to her financial plan.

Her reasoning was something I hear often: "I might not be making money, but at least I'm not losing money." The truth is, she was losing money. Cash historically has not kept pace with inflation, so the purchasing power of those savings was declining year after year. On top of that, there was the opportunity cost of having that money sitting uninvested.

The answer for a client like that isn't to go to the other extreme and put everything into stocks. It's about finding the right mix. For example, even a conservative, relatively low-risk investment like bonds can generate meaningfully better returns than cash sitting in a savings account.

The key is finding the right allocation that fits a client's comfort level while still providing the growth potential needed for long-term goals, and then rebalancing as markets and life circumstances change. 

Stay Engaged in the Process

A financial plan is a living document. Building it is a crucial step, but staying engaged with it over time is just as important.

Financial Planning Is Ongoing, Not One-and-Done

One thing that sometimes isn't emphasized enough is that financial planning is not a one-time exercise. When we work with clients, we build a comprehensive financial plan, and there's a lot of work that goes into it. But then we continue to update that plan as things change—whether it's shifts in the markets, changes in a client's life, or the unexpected happening. Jobs change. Health changes. Tax laws change.

My advice: don't build a plan and then leave it alone for ten years. Regular check-ins with your advisor help you to make informed adjustments along the way and keep everything aligned with where you are and where you want to go.

The Emotional Side of Money

Money can be emotional. That's true for everyone, but I think it's worth acknowledging because it affects financial decisions in ways people don't always recognize. Emotion can drive someone to cling to cash out of fear, or to avoid engaging with their finances altogether, or to make impulsive decisions during a market downturn.

One of the real advantages of working with an advisor is being able to step back from the emotional side of it. You hand that piece over to a professional who can look at things objectively and help you make decisions based on your plan rather than on how the market felt this week.

Choosing the Right Advisor

When it comes to selecting a financial advisor, I'd encourage women to look for a few things in particular.

• A partnership, not a directive relationship. Look for someone you feel comfortable with and can communicate with openly. We recommend an advisor who works with you on your goals and takes the time to explain strategies and get your input rather than simply telling you what to do. Understanding the "why" behind every decision is important.
• A fee-only fiduciary. "Fee-only" means the advisor is compensated by the client, not by commissions on the products they recommend, which removes potential conflicts of interest. "Fiduciary" means the advisor is legally obligated to act in your best interest. Those are two important terms to look for.
• Holistic scope. Look for an advisor who wants to talk about every aspect of your financial life— taxes, income planning, college planning, estate planning—not just investments.
• Experience with similar situations. If you're going through a divorce, or approaching retirement, or navigating a career transition, it helps to work with an advisor who has guided other clients through that same territory.

Closing the Gap Together

One of the reasons I'm passionate about working with women clients is that women have historically been underserved in financial advisory. I've seen situations where women felt talked down to or weren't given the time to have things fully explained. These are often highly intelligent women who simply don't have a background in investing. When they find an advisor who treats the relationship as a true partnership—where they feel comfortable asking questions and understand every aspect of their plan—it can be a real turning point.

That's the kind of relationship I want to have with every client. I want them to feel comfortable calling me and working together toward their goals. And when they reach those goals, it's a celebration.

With the right plan and the right support, women at any stage can take meaningful steps toward closing the retirement gap. Whether you're just starting your career, navigating a transition, or approaching retirement, having someone in your corner who will take the time to understand your situation can change the way you think about your financial future.

EP Wealth's financial advisors can help you build a plan that fits your goals and your life stage. If you'd like to explore how we can support your retirement planning, reach out to an advisor to start the conversation.

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