Women and Retirement

We look at the challenges and solutions for women's retirement planning and how women can plan for guaranteed income for life.

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When it comes to planning for retirement, women’s worries about their future shouldn’t outweigh their savings for a better life after retirement. However, women do face unique challenges when planning for retirement. 

The Gender Gap in Retirement

Today, women are facing bigger challenges in retirement than their male counterparts. Many leave the workforce to raise children or care for elderly relatives, which gives them fewer years to contribute to their employee retirement plan.   

The gender pay gap also poses challenges in retirement planning. The National Institute on Retirement Security reports that women age 65 and older typically make 25% less than men. As men and women age, the gap widens to 44% by age 80. Women are 80% more likely than men to be impoverished at age 65, while women between the ages of 75 to 79 are three times more likely than men to be living in poverty.

Longevity

When it comes to saving for health care costs during retirement, women need to set aside almost 20% more than men to cover medical bills in the final years of their life¹. The reasoning is longevity - women are living longer than their male counterparts.

A man reaching age 65 today can expect to live, on average, until age 84.3. A woman turning age 65 today can expect to live, on average, until age 86.6. Those are just the averages!  About one out of every four 65-year-olds (male and female) today will live past age 90, and one out of every 10 (male and female) will live past age 95².

Retirement is Not a Top Priority for Women

Many working women tend to put family’s needs before their own, whether that is caring for young children, sending older children to college or caring for elderly parents. 

The Pew Research Center confirms this trend with 2013 findings that 53% of mothers with children under 18 years old have taken a significant amount of time off from work, and 51% cut their work hours to care for a child or other family member. These interruptions in employment can diminish potential savings, and accumulated Social Security earnings will be lower as well.

Financial Freedom for Women

There is light at the end of the tunnel. Women can start now to improve retirement success by taking control of finances and seeking financial help from a trusted source. Here are some tips to get started on planning for a comfortable retirement:

• Join your employee retirement plan and contribute the maximum allowed – most companies match up to a certain amount or percentage        
• Balance your portfolio with various retirement solutions that can help with short and long-term financial goals
• Focus on health and wellbeing to cut down on future health care costs – healthier lifestyle changes now may reduce much more expensive medical bills later 
• Become more knowledgeable and confident when it comes to your finances – there are many resources such as books and podcasts, or visit a financial professional to discuss your individual needs

Retirement can be overwhelming and complicated for some, but it doesn’t have to be. By planning early, you can be prepared when your retirement years arrive.

Sources:
1. HealthView Services, “The High Cost of Living Longer: Women and Retirement Health Care,” 2016. 2. Social Security Administration, “Calculators: Life Expectancy,” 2017.  

The information provided is for educational purposes only and does not constitute advice. For specific details on how this may apply to your personal situation contact your personal financial advisor or insurance agent for more details. American Equity contracts are only sold through independent agents. To obtain a listing of agents in your area contact your state’s insurance department. 

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