Any advisor will tell you that every retiree is unique and therefore every retirement plan is distinct.
But there’s one way in which that is not entirely the case. Most advisors create one plan for a married couple, but that plan is representing two different needs. Remember, on average women still live longer than men and nearly every woman is likely to have sole responsibility for her finances at some point. This goes not only for the never married or divorced, but even married women given the likelihood that their husband will die first.
There are also other factors to consider. For example, women still tend to be the primary family caregiver. Taking time off to raise children can have a real impact on the bottom line when it comes to retirement. By staying at home, moms can miss out on the vital early years of contributing to a company retirement plan. They’ll also see less in social security later on due to working fewer years. And once the children have grown up, they may do another stint of caregiving with elderly parents.
Women also still face a wage gap. While circumstances have improved, women still earn less than men in almost every jog. In 2017, women earned 80.5 cents for every dollar earned by men. While leaving the workforce for caregiving contributes, traditionally female jobs also pay less than traditionally male jobs. This gap also impacts Social Security.
Once women retire, they can also look forward to higher health costs. Longer life expectancy means more money spent on staying healthy in those golden years. The average cost for women is $147,000, while it’s only $133,000 for men.
At the same time that women are earning less, they also tend to be conservative and risk averse in their investments. While this might be a good approach in retirement, it puts a damper on growth in the accumulation phase. Finally, women also tend to be tight-lipped about finances, feeling that this is a very personal aspect of life.
The bottom line is that women need to be extremely pro-active when it comes to saving and investing. Advisors need to be more cognizant of the particular issues that face women.
For more information on how both women and their advisors need to think about women’s retirement issues, please see:
Retirement Planning Is Different for Women. It Just Is. Here’s Why. | Kiplinger