Retirement Realities for Women

By Angie O’Leary, senior vice president with U.S. Bank Wealth Management –

In recent decades, women have made progress versus their male counterparts across almost every indicator, from education to career to family life. And yet in retirement, women continue to be influenced and disadvantaged by their traditional roles. Think about the following factors:

• Women still earn only $0.78 cents on the dollar compared to men. Logically, that means women close to retirement age will have significantly less retirement savings than men, despite all other variables being equal. [1]

• Women often take leave from work or end their careers early for family responsibilities. This again leads to lower savings overall and funding gaps in employer-sponsored retirement plans and social security.

• Yet, women can expect to live on average 5 years longer than men, which means that they have a longer retirement runway translating to higher retirement and healthcare costs that, as seen above, women are already less likely to achieve.[2]

No wonder that today, barely 33 percent of all women surveyed feel they are on track or ahead of schedule in planning or saving for retirement.[3]

In light of these realities, women need to be smart about preparing for their financial future and take responsibility for their later years. The good news is that planning ahead and making independent choices will go a long way in ensuring a woman’s path to a secure retirement. Below are some key questions to keep in mind:

• It sounds obvious, but many women fail to think about their own financial goals, independent of their family or partner’s. It’s not selfish, but rather a responsibility to yourself to consider your own goals in tandem to others.
• Understand your current financial reality ¾ this means taking part in family finances but also knowing where your own money is going. Do you have assets and savings already earmarked towards your goals? What can you do better and more efficiently?
• Do you have an emergency fund set aside to address short term unexpected expenses like healthcare costs or a job change? A cash or savings account with three to six months’ worth of income is the typical recommendation.
• What are the potential risks to your plan? Longevity in retirement, inflation, market volatility, and potential healthcare costs can significantly impact your plan. Therefore, women need to take a disciplined approach to saving more and managing risks. 
• Continue to invest in your career. Nothing should stop you from earning an advanced degree or certificate and asking for a raise. Fighting the systematic headwinds will help you actively prepare for you retirement.

[1] Women’s Institute for a Secure Retirement

[2] www.ssa.gov

[3] Women’s Institute for a Secure Retirement