Why Women Face More Financial Challenges in Retirement and What to Do about It

Being a financial advisor requires that I do massive amounts of reading in order to stay abreast of personal financial and economic trends and issues that my clients may face. Which means I am continually inundated with the reality of the state of our economy.

Quite frankly, it is a gloomy picture, especially for women.

Let’s face it, throughout history women have been getting the short end of the proverbial stick, especially in the area of financial security.

For instance, women are painfully aware of the pay gap that exists between the genders. Yes, men still earn more than women when working in the same professions. Yet, we are seeing more and more that women are earning more than their husbands and they are opening new businesses at a rate that outpaces men. Yay for us!

While evidence of these advances is encouraging, I urge women not to take their eye off of the real issue here, which is that women face a number of financial challenges in retirement.

A number of social and economic factors threaten the financial security of women, especially in retirement.

Statistically speaking, women outlive men. Not only because men tend to marry younger women, but because women live longer. Which means that if the husband requires extensive (and expensive) medical care before he passes, the wife will be left with depleted savings to live on.

By the way, financial experts are saying that retirees should plan on spending approximately $240,000 on healthcare costs. That’s $240K for each spouse. Yikes!!!

One of the reasons is obviously the rising costs of healthcare; but also because people are living longer.

Centenarians are the fasting growing age segment of our society.

The average age a woman becomes widowed is age 59 ½. So, if she lives into her nineties (or to age 100!), she will need at least thirty years of retirement income saved up.

If you haven’t figured it out yet, let me spell it out for you…..

Women are in danger of out-living their assets in retirement. This is called longevity risk.

Why is this happening you might ask.

Let’s look at the reality of how most Americans deal with money:

  • People are in denial. Studies show that people don’t realize how much they will need to retire. They think they will need a lot less than they actually do. But the reality is they haven’t considered the costs of healthcare and how inflation will erode purchasing power.
  • Americans are not savers. Studies show that 48 percent of Americans do not contribute to their retirement plans. Evidently these people are counting on Social Security. But the reality is additional assets to supplement SSI is necessary in order to maintain a comfortable lifestyle. One source suggests counting on 22 times your desired annual income.
  • Lack of tax planning. People don’t know what their taxes will be in retirement, which leaves them at the mercy of future tax rates because a majority of their retirement assets are in qualified plans. Distributions from qualified plans are taxable when they come out (save Roth IRAs).
  • So, how can a woman prepare for the economic storm ahead and ensure she enjoys a financially secure retirement? In a word…..


    If you haven’t been much of a planner with regards to your finances or retirement, here are a few tips to get you connected to your money:

  • Start talking about money. This is a great way to start connecting with your money. Even if you are married, be in the conversation about money and your overall financial wellness, especially your future financial security. For instance, my husband and I have “an appointment” to sit down together, just he and I, to go over our retirement. We all know we should do this, but if you both put it on the calendar, it’s more likely to happen. You can even make it fun by opening a great bottle of wine after (or heck during) the conversation.
  • Start small. If the idea of taking charge of your finances and retirement intimidates you, take baby steps. Arm yourself with information and knowledge. Read and learn as much as you can. (Subscribe to my newsletter so you can receive more articles like this one to keep you motivated.) Also, if you haven’t been much of a saver, start small applies here too. Make a decision to start saving today. Right now go open a separate savings account at your bank and set up automatic monthly deposits from your checking account even if it’s a small amount. It’s the action that matters most to get started.
  • Start where you are. Don’t fall into the trap of thinking you need to wait until you make more money. Or that you have to wait because you can’t afford to save right now. I have many clients who have managed to save plenty of money on annual salaries as low as $40,000. And, I have six-figure income earning clients who didn’t have a savings plan before they met me. Your income doesn’t matter. Start where you are.
  • Decide you will become financially savvy with what you have right now. Decide that you will connect with your money, which means you know what you have coming in each month; you know what your expenses are; you know what you need to be saving for retirement; and you know what financial tools will help you get there.

    Want to start taking charge of your finances now?

    If you have questions regarding your finances or you would like to contact me.

    If you want to receive more information on how to take charge of your finances or how to get started on planning for retirement, let’s stay connected on social media: