Men and women share the same goals when it comes to retirement planning. Both want their assets and investments to grow and provide the income and lifestyle they want in retirement.
However, how men and women go about achieving those goals can sometimes be different. The main reason is that women can follow a different career arc than men. This can be due to family responsibilities or other reasons.
In this article, we’ll discuss the retirement gap in retirement planning so women know how to overcome these challenges
Table of Contents
Wage gap
In recent years, there’s been significant progress on the wage gap that was present based on gender. For those just entering the workforce now, this will be less of a concern. However, for women who started their careers while a significant pay gap still existed, it can be a challenge when it comes to retirement planning.
Due to the possibly lower wages earlier in a woman’s career, they will need to offset that with more savings later in their career as their salary more closely matches their worth.
This means that women should reevaluate their retirement plans and savings strategies as they age. This is especially true if they haven’t adjusted their contributions accordingly.
For example, your current higher income may allow you to contribute more to your 401K now than before. Also, there are catch-up contributions that allow older workers to contribute more before retirement.
This is a perfect way for women to offset a possibly lower savings strategy earlier in their careers.
Time Off For Family Obligations
This can be another reason that can sometimes make retirement planning more difficult for women. Many women take time off to start a family. This can create gaps in earnings that can show up later as retirement approaches.
Also, taking time off to raise a family can sometimes slow career advancement, which can also impact savings toward retirement.
Taxation can also be an issue as sometimes it is more advantageous from a tax incentive standpoint for a woman to not work when starting a family if there is still a primary earner in the household.
Once again, this means that women in this situation may need to monitor their retirement strategy more closely when they return to work.
Consult with a qualified financial planner to go over your savings and contributions to see if you are on track to hit your targets when retirement comes.
Of course, everyone should be checking and reevaluating their retirement strategy regularly. But women may have to be more aware of this in order to offset any setbacks to their savings and contributions.
Longer Life
Women on average live longer than men. This means women may need more money for retirement so it can last their lifetime. On average, this means approximately an extra 3 years of retirement income is needed compared to a man, assuming they both retire at 65.
While these may all seem like substantial obstacles, with the right strategy and access to the right tools, women can overcome these issues and retire comfortably with the lifestyle they want.
The key is to make sure you select a wealth management expert who understands these issues and can tailor a strategy to fit your exact situation and goals.
ICCNV is an award-winning financial advisor located in Nevada. Both the Wall Street Journal and Barron’s have recognized them as the #1 financial advisor in Nevada for 8 consecutive years.
