Woman planning her retirement

Special Retirement Planning Considerations for Women

Women have a unique set of challenges to consider with a retirement planning strategy. Learn how to deal with them here.

If you’re a woman in retirement planning mode, or know one who is, here is a must-read article by Rodney Brooks of the Washington Post:

On Women’s Path to Retirement Security, There are Plenty of Hurdles

Retirement planning can be challenging for anyone, regardless of gender or background, but a recent survey suggests women face unique challenges. Brooks writes:

According to a new survey by GfK, a consumer marketing research firm, women in the United States are much more uncertain or pessimistic about their retirement finances, with 60 percent saying they are unsure or not confident, compared with 41 percent of U.S. men.

“Women do face a number of challenges ahead of retirement due to a lot of factors: longer life expectancies, lower average wages, less financial confidence. And they bear a large share of caregiving for both aging parents and children,” says Cathy McCabe, senior managing director of TIAA-CREF’s Field Consulting Group.

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Female Life Expectancy: A Factor in Retirement Planning

Of all the items cited here, life expectancy is the linchpin. It isn’t exactly news that women typically live longer than men, but the kicker is they’re living longer all the time. According to the CDC’s latest figures, the average female born in 2013 can expect to live 81.2 years—higher than the average male at 76.4 years. The average woman retiring at 65 in 2013 could expect to live 20.5 more years, compared to 17.9 for men.

These numbers strongly suggest many, if not most women will be on their own for at least a portion of their retirement, responsible for investing their savings and managing cash flows. Living longer also likely requires saving even more, as longer lifespans mean women’s retirement savings must cover more years of living expenses.

Start Retirement Planning Now

As a female, the earlier you start planning, the better. If you’re young, start (or keep on) saving, and invest those savings. As we discussed recently, compound growth is magical, and if you earn market-like returns on your savings over time, even a small annual retirement contribution of a few thousand dollars can grow into a big nest egg over time.

Understand Your Retirement Planning Investments

Don’t get hoodwinked by industry mythology claiming you should hold only a small percentage of your savings in stocks near or after retirement. Most folks still need long-term growth to provide a buffer against future cash flows, and radically reducing stock exposure can make this much more difficult.

Whether you’re married or single, get actively involved in your investments. Know what you own, and why, and make sure it stands a good chance of earning the returns you need over time. A simple compound growth calculator—available freely online—can help you estimate this.

Educate Yourself on Retirement Planning

Finally, if you’re among those who feel less confident, we’ve found knowledge to be an excellent tool to help. Markets are actually fairly simple and easy to learn about. You can find jargon-free introductions on websites like Investopedia, and The Wall Street Journal’s Guide to Understanding Money and Investing is another great resource (though some of its stock-picking and market analysis tips are rather suspect, in our view). And at the risk of shameless self-promotion, Fisher Investments CEO Ken Fisher has written some great reads on this subject, like Plan Your Prosperity and The Only Three Questions That Count.

The sooner you start focusing on your retirement planning and investing, the better prepared you’ll be when the time comes. Don’t delay!

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Running out of money in retirement is one of the biggest fears for many investors. This guide addresses some key questions many face when planning for retirement.

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The 15-Minute Retirement Plan

This guide addresses some key questions many face when planning for retirement.

cover image of the 15-minute retirement plan from fisher investments

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