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Retirement for Women: Facts & Strategies (but for men, too)

Becky Ferguson, CFP,

June 26, 2013

Growing Your Wealth, Managing Your Money


The savings suggestions written here follow a discussion of certain facts about women and finances. However, these savings strategies will work just as well for men.

Let’s start with the facts:  

A woman has an 80-90% chance that she will be solely responsible for her finances at some point in her life due to divorce or widowhood. The average age of widowhood is 55 years old. 

In 80% of the nation’s households, women are the primary decision makers regarding purchases. Furthermore, 62% of all car purchases are made by women.

On average, women earn less than men and contribute less to their retirement plans and social security. This can be attributed to time off work/at home raising kids, thus resulting in lower savings amounts at retirement. Over 50% of women expect they’ll have to work past normal retirement age to catch up.

Women outlive men by an average of seven years.  Longevity is one of the biggest reasons women need to save more for retirement. When a husband and wife are both living at retirement age, the wife will need substantially more to fund her longer retirement. If a husband and wife are the same age and both retire at age 66, the husband will need retirement funding for about 10 years, while the wife will need funding for about 17 years. If they each earned about $70,000 per year when working and need about 70% of that income during retirement, the woman needs a minimum of $343,000 more than the man to fund her retirement. That is if their earnings were equal. Plus, these figures don’t account for inflation.

Another challenge unique to women is that many women delayed entry into or left the workforce for a period of time to focus on family. This is a major challenge because not only is there a loss of employment income, but a loss of investment in employer-sponsored retirement plans and social security income calculation.

The reality is that women may be required to work to a more advanced age to fund their retirement.  If women want to retire at a normal retirement age, it is important that they begin saving for retirement early and continue throughout their lifetime.

Some proven strategies for accumulation of savings require diligence and discipline. Start early by creating and living by a budget. Determine the amount of money you make and compare that to what you spend. Small cuts to your spending will make a huge impact on your retirement nest egg. Bring lunch from home a few days a week and pass on the daily coffee drive-through. Build an emergency fund with part of your savings so that a “surprise” expense does not become a crisis that requires the use of credit. Live within your means:  Do not use credit cards unless you can and will pay off the balance each month. Don’t fall for the “no interest for 12 months” trap. Many of those offers will charge the full past interest amount if you miss one payment after 12 months.  Be honest. Make your budget realistic and stick to it. 

Visualize your retirement at 66. What does it look like and how are you going to get there?

How much do you need for a comfortable retirement?  If there is a known amount, calculate the annual savings to reach that amount.  People who plan have more a comfortable retirement than those who don’t.   There is an old but true saying, “people don’t plan to fail, they fail to plan.”

Save a portion of every paycheck.  If you’re not saving a minimum of 15% every month, make the necessary reductions to your expenses until you can.  If you are in your 30’s or 40’s save even more of your income.  If you have the opportunity to invest in your employer’s 401(k) plan, that should be a priority.  Most employers match a certain percentage of what you invest in your 401(k), a traditional 401(k) allows for pre-tax contributions and the growth of the investment is tax-deferred.

Once you have your 401(k) contribution set up, consider setting up a monthly automatic withdrawal into a mutual fund or other investment.  By doing these things, saving becomes a habit.  The sooner you get started the better.

Albert Einstein said compound interest is “the most powerful force in the universe.”  So consider this:

  • A 25-year-old who starts saving just $50 per month ($600 per year) at a constant rate of 5% would have over $75,000 at age 65, nearly twice as much as someone who saves $100 per month ($1,200 per year) beginning at age 45.
  • Consider downsizing your home and/or refinancing your mortgage.  Do not spend the equity in your home, it could possibly be used for retirement.
  • Don’t rely on anyone else to fund your retirement years, the fact is that half of all marriages end in divorce.  People who expect an inheritance might not ever see it.  Take responsibility for your own retirement and financial affairs.

See a Certified Financial Planner for professional guidance. Visit to work through the budgeting process.   Learn new skills; read more. Use an online retirement needs calculator. Reputable investment companies and mutual fund families offer excellent advice and information about saving, investments and retirement on their websites.

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This blog article is for informational purposes only, and is not an advertisement for a product or service. The accuracy and completeness is not guaranteed and does not constitute legal or tax advice. Please consult with your own tax, legal, and financial advisors.