3 Things to Know About Women and Retirement

What Are the Unique Challenges Women Face When Saving for Retirement?

Women face many unique challenges when saving for retirement. Most women will find themselves faced with choosing between paying debts such as student loans, childcare and health care expenses or investing in their future.

In other cases, some women are only able to work part-time, which hinders their savings for retirement. Women also live longer than their male colleagues but earn less in the workplace, causing many to work harder and longer to build equal savings.

What’s Driving the Investment Gap?

Women tend to look at investing differently than men. For example, women have a more conservative approach when it comes to building a financial plan with retirement goals. They tend to opt for the less risky option and a more balanced portfolio.

On the other hand, some women are unaware of the importance of a retirement plan, and, in turn, may not prioritize one. Since women earn less than their male counterparts, they tend to save less as well. Many women are also not given the same career-building opportunities as men, which means less executive compensation to support investments.

How Can Women Prepare for Unexpected Life Events in Their Older Years?

Women can prepare for unexpected life events by ensuring they keep their debts to a minimum and work on paying off those debts prior to retirement. With less debt to worry about, the more they will have to invest or save.

If married and one partner has little-to-no income, it’s a great idea to set up a spousal IRA, which will accelerate retirement savings. The working spouse can make contributions on behalf of the non-working spouse to ensure financial security in the long run. Should you get divorced, the non-working spouse will be able to keep the entitled spousal IRA.

Another option could be to purchase a straight life annuity that provides a guaranteed income stream until the death of the annuity owner, or opt for a life insurance policy with death benefits should you lose your loved one.