It’s fair to say that in the United States, women today are better educated and have more career opportunities than previous generations. However, even with those advancements, many women are still anxious about being financially secure upon their retirement. According to the Annual Transamerica Retirement Survey of American Workers, only 10 percent of women are “very confident” in their ability to fully retire with a comfortable lifestyle. In contrast to their male counterparts whose greatest financial priority is saving for retirement and building a large enough nest egg, women are focused on just getting by and covering their basic living expenses.
Even with today’s advancements, women continue to earn less than their male counterparts in salary. According to the Labor Department's Labor Force Statistics, women earned about eighty-two cents for every dollar a man made in 2016. Earning less income equates to women having fewer opportunities to build up their savings. Women are also more likely to take time off from the workforce to be caretakers for aging parents or small children. The resulting overall impact is lower lifetime earnings, lower lifetime savings, and reduced Social Security benefits for women. All of these factors can lead to significant risks when it comes to looking at retirement readiness for women.
The 2017 Transamerica survey resulted in these five statics for women:
Most women plan to retire after age 65 or not at all - Fifty-three percent of women plan to retire after age sixty-five or do not plan to retire at all.
Half of women plan to continue working in retirement - Fifty percent of women plan to continue working after they retire. Forty-five percent of those plan to transition into retirement by shifting from full-time to part-time or working in a different capacity.
Women guess their retirement savings needs - Fifty-six percent of women are guessing their retirement savings needs. Fewer than one in ten women have used a retirement calculator to estimate their needs.
Low household retirement savings is the norm for women - Men have more than triple the household retirement savings than women. Women report an estimated $34,000 compared to $115,000 among men.
Most women don’t have a backup plan - An alarming sixty-four percent do not have a backup plan if forced into retirement sooner than expected. (Unexpected retirement could arise due to job loss, health issues, family obligations, etc.)
The positive news is that women are taking proactive steps to help ensure they can continue working past age sixty-five. They are staying healthy, performing well at their current jobs and keeping their job skills up to date. That stated, everyone needs a retirement strategy that not only takes into account ongoing living expenses but other factors such as investment returns, inflation, your backup plan and pursuing your retirement travel dreams.
In Part II, we’ll review some retirement strategies that can help you work towards retirement readiness.
Wood Smith Advisors, a woman-owned Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.
“Finance Made Simple” blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.