Planning for retirement is complicated for any gender. But, retirement planning for women is even more difficult. This is mainly due to various issues. It could be career breaks, unequal pay for equal work, lower earning power, and longer life expectancy.
So, what do women need to overcome this? They need to have the correct information and plan accordingly to achieve a stress-free life after retirement. The much you should have for retirement, as women can’t be constant. However, the US government suggests everyone’s savings goal to retire comfortably should be 20 times their annual income.
Therefore having $500,000 is a good start. Let’s dig deeper into the article to find out the dos and don’ts of retirement planning for women.
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We all know that the key to a comfortable retirement has enough savings. But, most people face difficulties in the retirement savings road. This is especially so with women. They find it difficult to save enough for retirement. Due to various reasons, they find it hard to put a lot of money into their retirement plans.
According to PubMed, women are likely to live 4-7 years longer than men. And so should plan their retirement plans with more seriousness. Other factors that make retirement planning for women even more difficult include.
A spouse may at times make the difficult decision to file for marriage. Most often, this directly affects their financial life. And women are most likely to be on the disadvantaged end.
Why? Because, after divorce, they are less likely to receive alimony and often make less money than their spouses.
Women also tend to be the ones who give up their careers when children arrive. In return, this puts them at a disadvantage in providing financially for themselves in divorce.
Many women have full-time jobs. But, they are less likely to work in high-paying jobs that offer pension plans than men.
Women are more likely than men to switch jobs during their careers. It can be to take care of children and family members. This limits the amount of time in the workforce and prevents them from increasing future lifetime earnings.
Additionally, they are the caregivers. It’s a woman taking time off to care for children and other family members. But, once they do, they usually experience difficulty re-entry into the workforce. This leads to even more financial difficulties.
Women, on average, live longer than men. Mainly because of biological reasons such as genetics and lifestyle factors such as smoking rates and obesity. Due to this, they need to be mindful of how much money they need for their retirement years. That’s because they may receive social security benefits for more years.
There is an unfortunate wage gap between men and women. According to the United States Census Bureau, in 2012, the median income of women who worked full-time was $37,791 compared to $49,398 for men. This causes women to run into more significant economic problems in retirement since they need more money than men.
As a woman, have you ever wondered how much money you would need to retire? Or even more importantly, do you know how old your money will last in retirement? Well, Depending on your income, it’s recommended to have a retirement plan of over 20 times your annual salary.
Meaning if you earn $30,000 a year, the most conservative estimate for your retirement income needs is around $600,000. Women, money is often the cause of stress, but it can also be a source of comfort and security.
The older you get without planning for your retirement, the riskier things become. Many women plan to live off social security, but it’s rarely enough for their retirement.
Most women tend to forget themselves while caring for everyone else. Busy with taking care of the children, spouse, and parents while living and even after their deaths. It’s high time that women start taking better care of themselves.
While we can’t say precisely how much you should have for retirement. Set aside anything above 20 times your annual salary. This applies to any woman, whether single or married. Always have something set aside, as you can never tell when such things as divorce can happen!
Several issues are the pitfalls of women’s retirement planning, such as lack of knowledge and not being responsible with their retirement plans. This is mainly because, for most women, retirement planning isn’t their favorite thing.
Why? Let’s face it – the idea means giving up something more than just their paycheck. To plan for retirement, you need to work. And for most, retaining a full-time job or working for long hours.
For a woman, this means sacrificing time spent with their children or grandchildren, enjoying nature, or pursuing other interests. What’s more, the knowledge that they’ll be living longer than men has led to a distorted reality. Some people fail to factor in that someday they’ll stop working.
My point is: Retirement planning for women, especially in today’s economy, can be a painful process full of regret and fear. The good news is that we don’t have to let these fears and anxieties paralyze us. Today, we can do things to ease the pain and feel more comfortable about our financial futures.
As a woman, take the initiative to enroll in a financial planning course, attend seminars or workshops, or simply read books and articles on financial planning.
You can do this with the help of your partner, friend, or family member (if you have someone in your life who is more financially savvy than you are). Decide how much money you’ll need to save for retirement – and make it happen.
One of the most common mistakes women make when planning for retirement is assuming that their husbands will save for both of them.
Women need to take responsibility and not lean on their spouses to put money away in savings accounts. If you are married, insist that your spouse establish an individual retirement account (IRA) or Roth IRA where they can save for themselves.
If you are single, consider the same options. It is essential to have money saved up in savings accounts just for your retirement planning.
For some women, the idea of retiring at 65 is just too overwhelming. If this is the case, don’t fret about it! That is, as long as you are willing and your health allows it. You can do this by scaling back on your work commitments and taking on more flexible hours.
Give yourself a few more years and maybe work part-time. In addition, live frugally and take advantage of tax breaks. However, keep in mind that you can never work forever, and retirement time is beneficial as you get to rest off all those working years.
This mistake is common for men and women. Still, it can be especially detrimental to women due to their life expectancy. If you haven’t already started, the best time to start is today, even if you begin with not so much. The worst thing you can do is derail planning for retirement. It’s ideal to start in your 20’s.
It’s even sad that many companies still promote that their younger male employees should be saving more for retirement than their female counterparts. Statistics indicate that women need to keep more.
The much a woman needs for retirement is unique to each individual. As a woman, you need to figure out how much money you’ll need for your specific lifestyle and then save up that amount (but more if possible).
And because women tend to live longer than men, there’s another obstacle. Save enough for your extended retirement years. Unfortunately, no one number applies to all women. The much you need depends on many factors, including
- When you plan to retire
- Where you want to live in retirement
- Your health insurance costs
- The size of your expected pension or other investments
- How much you spend now
- And what your savings are (and that’s not even considering all the local taxes you’ll be paying)
For instance, a woman with a pension or other investments should understand how to manage money in different types of economies. She should know about risk diversification and consider outliving her savings.
An excellent general rule is that you should have about twenty times your annual income saved by the time you retire. That can help provide some guidance for women lost on the much to target for their retirement.
According to the Center for Retirement Research at Boston College, people could boost their chances of having enough money to maintain their standard of living by about 23 percent just by working until age 70. Women can do even better since they tend to live several years longer.
So, as a woman, you are willing and fit enough to work till 70. Your retirement amount will be less than someone who retired at 60 or 65.
Retirement for women is different from men. The fact of the matter is men usually marry younger women. They often divorce their spouses after retirement age to marry a younger woman. This can bring financial constraints to the left wife if she is not adequately prepared.
Also, retirement planning should specifically consider the fact that women typically live longer than men. Additionally, they earn less money on average than their men during their working lives.
Women also choose to spend more significant portions of their savings on child-rearing and household responsibilities. This reduces the amount of money they have available for their retirement years.
The standard age for retirement benefits is 65 years old. But, this varies by occupation or profession. Many women choose to retire earlier or later than this age based on personal preference and financial needs.
Some common reasons to retire early are health problems, financial needs, death of a spouse, or need to care for children at home
You can use the retirement calculator. It indicates the age and the much you’ll be having at your retirement age. You can also choose to approach a retirement planner, who can advise you on the years and the much you’ll have saved up come retirement.
Retirement planning for women is based on age. I think that 65 is the best age to retire if you are a woman.
Nonetheless, to make this decision, there are some things to consider. One of these is your health, and the other is the financial aspect of retirement planning for women. There’s no need to retire and end up having to live the rest of your life with financial difficulties.
Because on average, women earn lower than men. They also tend to work jobs that don’t offer pensions and have shorter life expectations than men. Women also outlive their counterparts, so this is a factor as well.
Statistically, of full-time working women between the ages of 25-64, 26% are without pension coverage. On the other hand, only 9% of full-time working men are in the same group. This is a considerable difference!
Generally, retirement planning for women comes with its challenges. But it can be a lot easier when you have the will and information than expected. As women, we also tend to undermine ourselves. At the same time, we have all it takes to get financial independence in our golden years.
About the Author
Sibongile Ngako is a Harvard-educated corporate fintech and compliance executive leveraging her expertise and background to help empower women professionally, personally, and financially.