It’s no secret that women are taking on more leadership roles in the workforce, as well as a leading role in household financial decisions. Did you know that while women are taking control of household finances, according to a 2015 study by Prudential, they are no more prepared to meet long-term financial goals than they were a decade ago?
So why should women take a proactive role in planning for retirement?
Women live longer on average
As the life expectancy increases, so do the number of years that individuals must support themselves after retirement. According to the United States Department of Labor, females retiring at age 65 can expect to live another 20 years— two years longer than men. Making a plan for income replacement after retirement is becoming increasingly important and females must think that in the last years of their lives they may be on their own, supporting themselves on their household savings.
Women need to compensate for time spent out of the workforce
The Social Security Administration found that on average, women work 12 years less over their lifetimes (due largely to caregiving responsibilities). Additionally, Pew Research Center discovered that 42 percent of mothers have reduced work hours to care for a child or family member, compared to 28 percent of fathers. This plays a role in the fact that women’s median retirement income is 58 percent of men’s median retirement income, according to the Society of Actuaries. If your savings have been affected due to a gap in your years at work, it is very important to take a disciplined approach to increasing your level of savings during your work-years.
Women on average retire at an earlier age than men
Women tend to retire earlier and live longer, leaving a longer time span to live on retirement income. The average retirement age in 2013 for men was 64. For women, according to a Think Advisor study, it was around 62. Sixty-eight percent of men who married since 2000 have been older than their wives, as the Austin Institute found in their 2014 study. According to the Society of Actuaries, “women have lower savings, lower private pension coverage, and depend more heavily on Social Security for retirement income.” They are also more likely to live longer and be alone, exposing them to additional risks.
Women have many variables to consider when planning for retirement and need to play an active role to ensure that they will have the funds that they need to get them through retirement. With diligent planning and conversations with their spouse, their employers and a financial planner, women can ensure their household saving strategy will allow them to meet their financial goals for retirement.