While an individual’s savings, profession, family, and education are all important factors when planning for retirement, gender is often under represented as a crucial factor impacting retirement. Women planning for retirement often face difficult challenges not faced by their counterparts.
Perhaps the most important factor is that women, on average, live longer than men, meaning that retirement will require more resources for women. In addition, the average woman will have a shorter work life, earn less over her career, and are less likely to have access to a retirement plan.
The gender pay gap is much more than just a women’s issue, it is also a significant planning issue. The wage gap disparity over the course of a woman’s working years could accumulate to her eventually not being able to retire comfortably.
While identifying the unique challenges women face is important, more critical is identifying what women can do to improve their retirement readiness. Here are some practical steps every woman can take to secure her retirement.
Planning cannot start early enough; however, it is also never too late to improve your situation. A plan starts with a vision of retirement. Ask yourself: When will I start? What will my spending needs be? Where will I be living? From there, you can develop an estimate of costs and craft a plan for building the required resources. The plan must address the uncertainties or risks of retirement, and for women, the most important are longevity, health care and long-term care costs, and the potential loss of a spouse.
Planning for the loss of a spouse begins with making sure that women understand family finances and have open discussions about retirement planning with their spouses. It also means planning for sources of income after the loss of a spouse and the unavailability of children to depend on.
As women live longer, planning for retirement without their spouse is critical. It can mean purchasing life annuities to insure against a long life, or shortening the retirement period by working longer. Working longer or even working part-time can be quite beneficial for those that have limited funding. Protecting employment opportunities by maintaining work skills, networking, and maintaining a healthy lifestyle, are all important to planning.
Finally, a longer life expectancy also exacerbates other retirement issues, as women are more likely to suffer from risks associated with aging such as higher medical expenses and more costly long-term care needs. Long-term care insurance is also a product that could help reduce the risk of long-term care costs in retirement, as women need significantly more long-term care than men. Ultimately, proper planning, education, awareness, and advice can ensure women are adequately prepared for the unique challenges they face in retirement.