Retirement Planning Challenges for Women

Retirement Planning Challenges for Women

Women are taking a greater role in household money matters, according to a new report by Allianz Life. But despite this, many women face the prospect of an underfunded retirement.

In the study, 51% of women said they are the “chief financial officer” of their household. When it came to managing finances, 53% said they hold “a great deal of responsibility” or “all of it.”

Nevertheless, signs indicate that women face unique challenges on the retirement planning front. Rising life expectancy, lower lifetime earnings, and reduced savings all contribute to a significant retirement income gender gap, reports Prudential Research.

Sure, these challenges may seem considerable. But the good news is you can do many things to strengthen your retirement security and financial confidence.

Confident decisions start with being well-informed. So, as you plan for your retirement, it’s important to understand the challenges facing you and other women today. Here’s a quick look at some common issues that will likely come your way.

Women and Their Challenges in Retirement Planning

When reading through these challenges, it’s helpful to consider them in the overall scope of financial retirement planning with your partner. Many financial decisions that you will make will impact you individually.

This holds true on several retirement choices, from deciding when to leave the workforce to planning for retirement income, claiming Social Security benefits, and even meeting retirement tax obligations.

Longer life expectancy. Women outlive men on average. This adds additional years to retirement, which means that women have more time they should plan for.

According to the Social Security Administration, a woman reaching age 65 today would be expected to live, on average, until age 86.6. On the other hand, a 65-year-old man today would be expected, on average, to live till age 84.3.

While these statistics give an idea of a timeline goal, they are only averages. Around 25% of 65-year-olds today will live past age 90, and about 10% will live past age 95. So your financial plan should prepare you for potentially 30 years or longer in retirement.

In financial planning circles, we call this a “planning horizon.” A qualified retirement planning company can help you create a planning horizon that’s right for you, but just so you know, many financial professionals use the nineties or beyond as a benchmark.

Significant retirement income gender gap. According to Prudential Retirement, women may have much less retirement income than men. Prudential research indicates that, at present, the median yearly income of women ages 65 and up is 42% lower than men.

This is due to a number of factors, including women balancing larger caretaking responsibilities with work and other competing demands for their time. Both on an annual and a lifetime basis, women’s average earnings are outpaced by men’s own.

In 2016, full-time and salaried female workers earned $0.82 to every $1.00 that full-time and salaried male workers earned, reports the Bureau of Labor Statistics. In turn, lower earnings and high caretaking responsibilities mean a shortfall in Social Security benefits. Prudential Research estimates that Social Security benefits for women are 23% lower than men.   

Overall, the average monthly Social Security benefit is about $1,261 — which adds up to $15,132 of total income from Social Security each year. For men and women wanting more than a bare-bones lifestyle, the challenge is filling the income gap. They will need to decide how they will pay for retirement with other income sources.

However, this income gender gap puts additional pressure on women to save more, and it especially affects women who are divorced or single. 

Overcoming challenges when there’s an age gap between partners. Recent U.S. Census data says the average age gap between couples is 2.3 years. For those with partners who have wider age gaps, there may be greater challenges. Their retirement planning will need to account for many “what ifs,” including:

  • Planning for different scenarios of when both partners actually retire
  • Ensuring retirement savings last as long as each partner lives
  • Claiming Social Security at times that are right for a couple’s needs, while maximizing benefits
  • Being prepared for when a partner passes and how the surviving spouse will make up lost income
  • Accounting for required minimum distributions, penalties for early withdrawals, and other tax obligations tied to spousal ages
  • Deciding on which financial products will be used to provide income
  • Having contingency plans in place for when one partner dies

Overall, couples with wide age gaps will need to figure out how to “stretch” their financial resources out long term. The sooner you can get a retirement roadmap in place, the better. A retirement-focused, knowledgeable financial professional can help you map out your needs, goals, and different solutions.

Higher risk of disability and need for long-term care. On average, women tend to outlive men by 5 years. Because of their longer life expectancy, women can be more at risk for suffering from disability. According to the U.S. Treasury Department, Office of Economic Policy, women make up two-thirds of nursing home residents.

Past research indicates retirement-aged men would be expected to suffer 1.5 years of mild to moderate disability, then 1.5 years of severe disability. In contrast, retirement-aged women would be expected to spend 3 years with mild to moderate disability, then 2.8 years of severe disability.

As a result, retirement planning for women should include strategies to pay for needs of long-term care, healthcare, and other challenges relating to aging. 

Planning for the Future

It’s clear that women have a number of unique challenges in retirement. Fortunately, there are steps you can take starting today. Studies show working with a financial professional leads to better outcomes, including more retirement savings, greater confidence, and better financial wellness.

As you plan for your own retirement, a qualified financial professional can help you create a plan that helps you achieve your goals and prepare you for these challenges. If you are ready, financial professionals stand ready to help you at

Use our “Find a Financial Professional” section to connect with someone directly. Should you need a personal referral, please call us at 877.476.9723.

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