Addressing the Unique Retirement Challenges for Women

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Addressing the Unique Retirement Challenges for Women

For decades, the financial world has approached retirement planning with a one-size-fits-all mentality. However, women face unique challenges when it comes to preparing for their golden years. 

In this blog, we’ll discuss the retirement preparedness gap that exists for women, accentuated by factors like the wage gap, marital status, and fewer years in the workforce. For a more secure retirement, women need to proactively understand their finances, consider various retirement-saving methods, and engage in the adapting world of financial planning. Here’s what you should know. 

Marital Status Influences Women’s Retirement Confidence

Recent insights from the Employee Benefit Research Institute (EBRI) emphasize the importance of tailoring retirement advice to women’s marital situations. This research, analyzing over 1,500 workers and 1,100 retirees, highlighted that single women generally have lower retirement confidence and financial standing than their married counterparts. For instance, 56% of never-married women and 58% of divorced women possess assets under $25,000, while only 27% of married women report the same.

Furthermore, single retirees often find their expenses surpassing their expectations and tend to retire earlier than they had intended. Some pivotal takeaways from the report include:

  • For unmarried women, retirement savings is often a low priority. 
  • Almost half (45%) of never-married women are unsure about seeking financial advice.
  • Married women retirees often have a more fulfilling retirement experience compared to divorced or widowed women.
  • Early retirement rates stand at 42% for married women, but they rise to 51% for divorced or widowed counterparts.

The History of the Wage Gap

Despite significant strides in educational pursuits, women continue to face economic disparities in the workplace. In recent years, women have surpassed men in earning college and advanced degrees, setting the stage for a potential shift in earning dynamics. However, as of 2023, the wage disparity remains glaring. 

Women who work full-time throughout the year earn, on average, only 83.7% of their male counterparts’ earnings. The retirement preparedness gap is heightened by periods where women may leave the workforce, either for caregiving responsibilities or other reasons, leading to fewer years of contributions to retirement accounts. 

The Implications of Women’s Longer Life Expectancy

Women generally have a longer life expectancy than men. Various studies and statistical data indicate that, on average, women can anticipate living into their mid-80s, which is approximately five years longer than the average lifespan of their male counterparts. There are multiple factors contributing to this disparity, including biological, societal, and lifestyle differences. For example, women are often more proactive about their health, frequently seeking medical advice and regular check-ups, which can contribute to early detection and management of health issues.

Given this longer life expectancy, women face unique financial challenges, especially when it comes to retirement planning. The extended lifespan means that they may need to support themselves without a regular income for a more extended period than men. As a result, women need to be more forward-thinking in their financial planning, ensuring they have sufficient savings to last them through their retirement years. This necessitates not only setting aside more money but also making intelligent investment choices to help maximize returns.

The Importance of Financial Literacy for Women

Financial literacy, defined as the understanding and application of various financial skills and concepts, plays a pivotal role in shaping one’s economic future. For women, especially, the importance of financial literacy cannot be overstated due to the unique challenges they face in the economic realm. Historically, societal norms have often positioned women in roles where they were less engaged in direct financial decision-making, either due to cultural expectations or traditional family structures. Today, even with shifts in societal norms, many women still grapple with a lag in financial confidence, which can have profound effects on retirement planning. 

Retirement, an inevitable phase of life, requires meticulous and long-term planning. Yet, due to gaps in financial literacy, many women remain unprepared or underprepared. The gender pay gap, career interruptions for caregiving, and longer life expectancies are all unique factors that compound the issue. When women lack a comprehensive understanding of investments, interest rates, inflation, and the benefits of early and consistent saving, they can find themselves at a disadvantage in building a robust retirement portfolio. 

Additionally, with the increasing rates of divorce and the high probability of women outliving their spouses, there’s a growing likelihood of women needing to manage their finances independently in their later years. Without proper financial literacy, they’re at a heightened risk of outliving their savings or facing financial hardships. Emphasizing financial education for women from an early age and throughout various life stages can empower them to make informed decisions. This knowledge will not only influence day-to-day money management but also significantly shape their retirement strategies, helping to ensure security and comfort in their golden years.

Practical Steps for Women Navigating Retirement

Given the distinct challenges women encounter in preparing for retirement, it’s crucial to heed the advice of financial advisors who craft tailored strategies to meet these unique needs. Firstly, starting early cannot be emphasized enough. Begin your retirement savings journey as soon as possible, even if it’s a small amount initially. Compounding interest will work in your favor, allowing your savings to grow over time.

Married women should engage in financial discussions and decisions alongside their partners, helping to ensure that both are aligned in their financial objectives and understand the complete financial picture. And for women who find themselves single, either through choice, divorce, or widowed, establishing a clear, independent financial path is paramount. For those who experience breaks in their careers, look into retirement saving options that aren’t strictly tied to employment, like IRAs. Having an emergency fund is also wise—so you don’t have the sudden need to dip into your retirement savings.

Thirdly, diversify your investments. With a longer lifespan, women might consider a mix of conservative and slightly aggressive investments to ensure growth while mitigating risks. Lastly, stay educated. Attend financial literacy workshops, read relevant books, and ensure you’re well-informed about investment vehicles and opportunities that align with your financial goals. If unsure, don’t hesitate to consult with a financial advisor, preferably one who understands the intricacies women face in the financial realm.

Final Thoughts

In the evolving landscape of financial planning, it’s paramount to recognize and address the unique challenges women face when preparing for retirement. From societal structures and marital dynamics, to wage disparities, women’s financial journey demands specialized attention. Armed with proper knowledge, early planning, diversified investments, and continuous education, women can chart a course toward a financially secure retirement.

If you’re looking to gain a clearer perspective on your investment strategies, CKS Summit Group welcomes you to consult with our experienced retirement income advisors. 
Starting early amplifies the potential for a comfortable retirement. But it’s never too late to get your retirement back on track. Start the conversation with us today at