Retirement Guide for Women
Everything You Need To Know To Retire
How We Got Here
When it comes to retirement planning, it’s important to recognize that, compared to men, women need to do more with less. There are lots of reasons for this discrepancy – some under your control, some not – but the takeaway is clear: To achieve the retirement you want, it’s critical you take an active role – and the sooner the better.
Women Tend To Have Less Wealth at Retirement ...
It’s no secret that, even when accounting for potentially mitigating factors, women earn less than men – barely 82 cents on the dollar.1 While an 18-cent gap might not sound like much, it can have profound, far-reaching consequences on retirement savings over the course of a career:
- It results in fewer funds available to be moved into savings or invested – a difference that gets magnified over time as wealth accrues and is reinvested year after year.
- It results in fewer resources available to be put into a retirement plan, often the biggest source of retirement funding.
- Because Social Security is based on the lifetime earnings, women making less than men can expect a commensurate drop in Social Security income.
So for most women, three of the main sources of retirement funding are underfunded, compared to their male counterparts. But it doesn’t end there:
Earnings
Education alone isn’t enough to narrow the gender gap: Over the course of a lifetime, a woman with a bachelor’s degree earns on average just 60% what a male college graduate earns.2
To Be Caregivers
Adult daughters are nearly twice as likely as adult sons to be the primary long-term caregiver of parents.2 Not only do they incur additional expenses associated with care, but that time spent out of the workforce is time not contributing toward retirement.
To Be Single Parents
Women are four times more likely to be single parents than men, meaning more of their income is spent caring for children.3
As a result of gender discrepancies like these, women’s average retirement savings are only 59% of those of men upon entering retirement.4
... Despite Having Greater Retirement Expenses
The gender gap can be especially acute in retirement, when women can expect to have a greater need for resources for a longer period of time. Consider:
On average, women live nearly 5½ years longer than men.5 That additional longevity not only requires additional funds for daily living, but as the surviving partner, older women frequently have to assume responsibility for their spouse’s medical and long-term care expenses.
In addition to living longer, women are more likely to be single longer – at age 65 and older, nearly half of all women are single, compared to just 21% of men.6
Need Care
• twice as likely to be living with a disability7
• nearly twice as likely to develop Alzheimer’s disease8
• more likely to be enrolled in hospice, nursing homes and assisted living communities9
• among those 75 and older, 60% more likely than men to need help with activities of daily living like bathing or eating10
As much attention is placed on the income gap between men and women, there’s a general misunderstanding that men’s and women’s expenses in retirement are roughly equal. Recognizing that women can have much greater expenses in retirement should be top-of-mind for any woman making decisions on her retirement.
Baird's Retirement Guide for Women:
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How We Got Here
Understanding Your Wealth: Assets >>
Understanding Your Wealth: Income >>
Understanding Your Wealth: Liabilities >>
Understanding Your Wealth: Expenses >>
Where We Go from Here >>
