For many women, financial planning presents some challenges their male counterparts do not face. Longer life expectancies, occasional career interruptions for leave, and the gender pay gap are just a few of the most common aspects women may consider when planning for retirement.
Crafting or refining a retirement plan at 40 years of age is essential for women. Financial planning is necessary to enjoy financial stability, and navigating around the unique hurdles women face can help them make better decisions. Let’s examine some of the key obstacles women can overcome—along with some steps and strategies to build a robust retirement plan.
Retirement for Women: Financial Planning Obstacles
Women encounter several issues in retirement planning that may be necessary to consider when preparing for the future.
Longer Life Expectancy
The National Center for Health Statistics shows a big difference between the life expectancies of American women and men. Data from a 2022 study reports that the life expectancy of women in the U.S. averages 80.2 years—a full 5.4 years more than the average life expectancy for men. This indicates that women likely have more retirement time to plan for.
Income Gap
Despite increased efforts to attain equality, women still face a substantial pay gap compared to their male counterparts. As of 2022, American women earned an average of 82% of what men made, limiting their ability to save for retirement. Some women may earn less due to pausing their careers to start families.
Healthcare Expenses
With their longer life expectancy, women may encounter higher medical expenses in retirement than men. These costs may escalate when women need long-term care or treatments for conditions older individuals commonly face.
Lower Social Security Benefits
Because many women have shorter times in the workforce than men, they may receive lower Social Security benefits. As this disparity affects retirement income for women, financial planning is especially important.
Setting Retirement Goals
For both men and women, financial planning is more productive when it reflects a set of attainable goals. Some of the clearest, most reasonable goals include:
- Setting a target date for retirement
- Planning your desired retirement lifestyle
- Evaluating current savings and income
- Assessing future needs with retirement calculators
Circumstances can always change. It’s always worth leaving substantial room for adjustments in your retirement plan. Here are some areas that may need more focused attention.
Maximizing Retirement Contributions
Whenever possible, making the maximum annual contributions to a 401(k) account, traditional IRAs, or Roth accounts can help women grow wealth more quickly. Married women may also rely on spousal IRAs if they experience career gaps.
Investing to Grow Wealth
An investment account can produce significant gains in wealth for the future. It’s always good to maintain a diverse portfolio of several different types of holdings in various sectors and market caps. Tailor your investment strategy based on your risk tolerance, age, and time frame.
Planning for Healthcare
Medicare and long-term care planning are essential to consider before issues arise. Find out about Medicare eligibility requirements, coverage options, and extended care needs in retirement. Starting a tax-advantaged health savings account (HSA) and an emergency savings fund can be beneficial—talk to a financial coach about all your options.
Social Security and Pension Planning
Many women rely on benefits from Social Security or pensions in retirement. You may consider delaying the receipt of Social Security benefits until later in life since that might result in larger monthly payouts. Think about setting up spousal and survivor benefits, if applicable, in case of your passing early.
Professional Financial Guidance for Women Planning for Retirement
For women, financial planning for retirement is a key process that needs attention. At Emerj360, we work with our clients to build comprehensive strategies and approaches that can facilitate good financial health. When you contact one of our financial coaches, you’ll meet a knowledgeable professional who keeps your personal situation, challenges, and ultimate goals in mind at every step.
Our team provides personalized financial and retirement planning with a strong fiduciary commitment to your priorities. We’re a fee-only firm, so our guidance is always focused on your goals, not our commissions.
To schedule a meeting, call 833-637-5360 or book online here.
