Retirement planning for women: Making those years count

On average, women tend to live a few years longer than men.¹ While the reasons are still being studied, this longevity has important financial implications. A longer retirement means more time to enjoy life — but also a greater need for financial preparedness.

Longevity and financial readiness

With a longer life expectancy, you’ll have the opportunity to enjoy your retirement. That’s a positive — more time for travel, hobbies and family. However, living longer means you could outlive your retirement savings. And despite progress in gender equality, women still face unique financial challenges that can impact retirement readiness.² Planning ahead and saving more could help ensure a secure and fulfilling retirement.

Navigating financial challenges

Research has shown that, on average, women earn less than men, which means they have less money to invest.³ Women are also more likely to take time from their careers for family responsibilities. These factors can lead to lower lifetime earnings and reduced Social Security benefits. Among Americans age 65 and older, women are more likely than men to rely on Social Security for the majority of their income.⁴ Therefore, starting a retirement plan early can help overcome these hurdles.

Visualize your retirement

The earlier you begin planning, the better your chances of achieving your goals. Envision where you’d like to be. Think about how you want to spend each day, where you want to live, how often you’d like to travel. A clear vision can help motivate you to reach your goals.

Assess your current financial picture

Now take a close look at where you stand financially. Look at your spending, debt and savings, and identify areas where you could spend less. When you’ve established how much money you can free up, you can decide how to redirect it. Even a few small adjustments today can lead to meaningful results over time.

Maximize your retirement contributions

Many employers offer tax-deferred retirement investment plans, such as 401(k), 403(b) or 457 plans — all of which are valuable tools for investing in your future. Participating in your employer’s plan — and contributing as much as you can — allows you to benefit from tax-deferred growth and potential employer matching.

Beyond the basics

Here are some tips as you continue planning. For one, it’s important to have an open conversation with your spouse about retirement goals and budgeting. If you experience a divorce, it will likely impact your planning. For example, if you were married for at least 10 years, you may be eligible for Social Security benefits based on your former spouse’s record. And any share of your former spouse's pension or 401(k) plan can be negotiated as part of the divorce settlement. Learning about investing and understanding your risk tolerance can help you make informed decisions.

Strategize for the long term

Since retirement can last 20 to 30 years, it’s important to plan for both expected and unexpected expenses. Start with an emergency fund that covers six months of living costs. Then, organize your assets into three categories:

• Short-term funds: For the necessities, such as food, housing, utilities, taxes, health care, insurance and emergencies. Potential sources may include Social Security, pension, part-time income and rental income.
• Mid-term funds: For the niceties, such as travel, entertainment and home or car repairs. Potential sources include retirement accounts, interest or dividends, home equity, employment income and savings.
• Long-term funds: For growth and inflation protection. Potential sources include long-term stock investments, bonds and cash value life insurance.

Your future, your plan

While there are challenges, a thoughtful and proactive approach to retirement planning can help you build a secure future. Speak with a financial professional to explore strategies tailored to your needs and goals.