Women around the world are concerned about their retirement prospects. In the 21st century, women have more education and career opportunities than their grandmothers ever did, but the retirement path is still not always a smooth one. Lower wages due to gender differences, as well as absence from the workforce due to parenting or caregiving, can create negative effects on the long-term financial stability of female employees.
It’s a fact that women trail behind men when it comes to saving and planning for retirement. It’s also a fact that women tend to live longer than men, which suggests an even greater need for women to get serious about preparing for their later years.
For the past 12 years, the Transamerica Center for Retirement Studies® has been publishing a retirement survey, and a significant part of this research is devoted to publishing research reports about women in an effort to raise awareness of the retirement risks that women face. The latest survey report outlines a lengthy list of “facts” about women’s retirement outlook.
Below is an abbreviated list of these facts, along with some tips that women can use to take charge of their retirement planning.
Retirement Confidence is Low. While 32% of men admit they are “not too confident” about their ability to comfortably retire, nearly half of women (45%) express that same sentiment.
Many Expect to Retire after Age 65 or Not at All. Fifty-three percent of women plan to retire after age 65 (40%) or do not plan to retire at all (13%). This figure compares to 54% of men when asked the same question.
Most Lack a Plan “B”. Sometimes people are forced into retirement sooner than expected, perhaps due to unexpected job loss, medical issues, or family obligations. Only 19% of women and 31% of men have a backup plan if faced with one of these circumstances.
7 out of 10 Women Save for Retirement. Seventy-two percent of women take advantage of employer-sponsored plans such as a 401(k) and/or savings plans outside the workplace (e.g. IRA), while 80% of men do the same. Men also start saving at an earlier age (median 26) compared to women (median 28).
Many Women Guess their Retirement Savings Needs. According to statistics, women live longer than men and should be saving more to support themselves in their retirement years. However, women tend to “guess” how much of a savings bucket they will need rather than using calculators or spreadsheets. Men are more likely to use mathematics.
Lack of Knowledge about Social Security Benefits. All retirees should educate themselves on the availability of government benefits. However, baby boomers (those born between 1945 and 1964) often fail to brush up on this knowledge. Only thirty-eight percent of female baby boomers claim to know “a great deal” or “quite a bit” about Social Security benefits, compared to 55% of baby boomer men.
Now let’s take a look at some suggestions for helping women become retirement ready.
The key is to START saving, and get into the habit of saving on a consistent basis.
If a retirement plan is offered at work, participate in it. Take full advantage of any employer matching contributions, if available. Take advantage of catch-up contributions if you are age 50 or older.
Maintain your ability to continue working past age 65. Keep your job skills current, learn new skills and technologies, or join a networking group.
Educate yourself about investing. Learn how to make your savings last longer by knowing when to take withdrawals from retirement accounts, and the best time to start Social Security. It’s important to minimize taxes and penalties, and maximize benefits.
Although every person’s situation can be unique, the tools for dealing with these situations are similar. And using as many tools as possible can add up to a big result!