Provided by Whitlock Wealth Management
Saving for retirement is never easy, but women in particular can face unique challenges. Statistics from a recent Morningstar special report on women and investing show why it’s important they make retirement planning a personal priority—and start as early as possible.
Challenges Women Face
- The earnings gap is real. Over a lifetime, whether they have a high school education, a bachelor’s degree or an advanced degree, women earn, on average, significantly less than men with equivalent schooling. Consequently, many women have less income available to put toward their futures.
- Earnings peak earlier. On average, women’s earnings peak at age 44, while men’s earnings continue to climb until age 55. That means less income growth over a career lifetime for women.
- Caregiving responsibilities lower women’s lifetime earnings potential. More women than men report having to reduce hours or quit working at some point during their careers to care for loved ones. Meanwhile, men keep earning.
- Women live longer. With a higher average life expectancy, women need to fund more years of retirement despite earning less during their working years.
- Long-term care may be on the horizon. It’s estimated that 58 percent of women age 65 or older will need long-term care during their lifetimes. Assisted living and nursing home facilities can be quite expensive.
- Women of color face the greatest income disparities. As a result, one quarter of Black women over age 65 and 31 percent of Hispanic women over age 65 live in poverty.
Enhance Retirement Readiness
With these uphill challenges, it’s no wonder women are more likely than men to fall short of their retirement goals. And the pandemic hasn’t helped matters either, considering most job losses in 2020 occurred among women. Here are steps you can take to change this concerning pattern and enhance your own retirement readiness:
- Put time on your side. The sooner you prioritize retirement planning, the better. Grow your nest egg with consistent contributions. Automatic deposits make it easy; simply identify the amount or percentage you want to save from every paycheck. Invested savings can grow over time through compound interest.
- Seek income equality. Know your worth and advocate for fair compensation. Be willing to negotiate for salary increases. Consider moving into a higher-paying career if earnings are limited in your field.
- Maximize your retirement plan contributions. Take advantage of the employer 401(k) contribution match if it’s available to you. Whether it’s a partial match or dollar-for-dollar match, those employer dollars boost your retirement savings account for free.
- Work longer. Every year you remain in the workforce and continue to earn a paycheck is one less year you need to tap your savings. If you enjoy what you do, stay in your career. If you face a mandatory retirement age, find other work for the income it provides.
- Find a side gig. Some women boost their retirement savings by generating income through the gig economy. Consulting, teaching and sales are just a few ways to produce income to increase your bottom line.
- Make sound decisions when choosing your government benefit options. Claim your Social Security benefits at full retirement age (or later) to receive your maximum monthly benefit. Filing at an earlier age will result in a permanent reduction in benefits. Medicare is different: you must sign up during the limited enrollment window on either side of age 65 to avoid penalties. Since future medical needs and costs are so unpredictable, it’s generally recommended to also purchase a Medicare Supplement insurance plan, which helps pay for out-of-pocket costs such as co-payments, coinsurance and deductibles under Original Medicare.
- Get financial planning advice. Enlist a knowledgeable ally to help you improve your retirement outlook. A financial advisor can help you plan for retirement along with other important life goals.
Source: Morningstar, “Women and Investing:100 Must-Know Statistics About Women and Retirement”
Bennett C. Whitlock III, CRPC®, is a Private Wealth Advisor and CEO with Whitlock Wealth Management, a private wealth advisory practice with Ameriprise Financial Services, LLC. He specializes in fee-based financial planning and asset management strategies and has been in practice for 26 years. To contact him visit whitlockwealth.com, call 877-WHITLOCK or email email@example.com. Offices are located at 12848 Harbor Dr, Ste 101, Lake Ridge, VA 22192 and in Downtown Historic Manassas at 9073 Center Street, Manassas VA 20110.
Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.
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