Retirement planning is not just about saving your money; it’s also about ensuring that the money you saved will last for as long as you need it. Unfortunately, women face unique challenges when it comes to retirement planning.

The combination of longer life expectancy, lower earnings, and career gaps can put them at greater risk of not having enough income to cover their expenses in retirement. In this article, we will explore the retirement risks that women face and provide tips on how to overcome them.

The Gender Retirement Gap

Women are more likely than men to underestimate the amount of money they will need in retirement.

According to a study by the Transamerica Center for Retirement Studies, only 12% of women are “very confident” that they will be able to retire comfortably, compared to 22% of men. Additionally, women are more likely to retire earlier than planned due to caregiving responsibilities or health issues.

The Wage Gap

The wage gap between men and women is well-documented. Women earn about 82 cents for every dollar that men earn, according to the National Women’s Law Center. This disparity can have a significant impact on retirement savings.

Because women earn less, they contribute less to their retirement plans, and their retirement benefits are also lower. Over time, this can add up to a significant gap in retirement savings.

Career Gaps

Women tend to take more time off from work than men to care for children, aging parents, or other family members. Career gaps can result in lower wages, reduced retirement contributions, and fewer promotions.

Workers who take a five-year career gap may lose out on up to $650,000 in lifetime earnings, according to a study by the National Institute on Retirement Security. This loss can have a significant impact on retirement savings.

Longevity Risk

Women, on average, live longer than men. According to the Social Security Administration, a woman who turns 65 today can expect to live, on average, until age 86.6, while a man can expect to live until age 84.3.

This means that women will need to fund their retirement for a longer period than men, increasing the risk of running out of money.

Healthcare Costs

As women age, they are more likely to need long-term care than men. According to the Department of Health and Human Services, 70% of individuals over age 65 will require some form of long-term care during their lifetimes.

Women are also more likely to need a nursing home or assisted living facility, which can be expensive. These costs can quickly erode retirement savings.

Social Security Benefits

Many women rely on Social Security benefits for a significant portion of their retirement income, but these benefits may not be enough. Women’s benefits are typically lower than men’s due to shorter work histories and lower earnings.

Women who took time out of the workforce to care for family members may also have lower Social Security benefits. Additionally, the Social Security program is facing financial challenges that may result in benefit cuts in the future.

Tips for Overcoming Retirement Risks

Despite the challenges, there are steps women can take to improve their retirement prospects:.

Start Saving Early

The earlier you start saving for retirement, the more time your money has to grow. Even small contributions can add up over time. Take advantage of your employer’s retirement plan or contribute to an individual retirement account (IRA).

Consider automatically increasing your contributions each year to reach your savings goals.

Maximize Retirement Contributions

Contribute as much as you can to your retirement plans. If you’re over age 50, take advantage of catch-up contributions, which allow you to contribute more to your retirement accounts each year.

If you’re self-employed, consider setting up a retirement plan for your business.

Delay Retirement

Delaying retirement can increase Social Security benefits and give you more time to save. Consider working longer, even if it’s part-time, to increase your retirement income.

Many people find that they enjoy working longer and feel more fulfilled by remaining active in their careers.

Career Planning

Plan your career to maximize your earning potential. Negotiate your salary and benefits, and consider taking on additional responsibilities to earn promotions.

If you take time off to care for family members, look for ways to stay connected to your profession, such as taking classes or volunteering.

Long-term Care Insurance

Consider purchasing long-term care insurance to protect against the high costs of healthcare in retirement. Long-term care insurance can cover expenses such as nursing home care, in-home care, and assisted living facilities.

Be sure to compare policies and costs before making a decision.

Seek Professional Advice

Meet with a financial advisor who specializes in retirement planning. A professional advisor can help you create a retirement plan, set goals, and design an investment strategy that meets your needs.

They can also provide guidance on tax strategies and Social Security benefits.

Final Thoughts

Retirement planning is essential for everyone, but it’s especially crucial for women. As we’ve seen, women face unique challenges when it comes to retirement, from the gender pay gap to career gaps and longevity risk.

But with careful planning, dedication, and the right tools, women can overcome these challenges and enjoy a comfortable retirement.