The specific challenges women face when it comes to building a financially secure retirement were highlighted earlier this month at a hearing by the Senate Special Committee on Aging and in a briefing by the Employee Benefit Research Institute (EBRI).
It’s well-known that women generally live longer than men. However, a longer life means that retirement savings have to last longer and will likely need to cover more significant healthcare costs.
At the Senate Special Committee hearing, Women’s Institute for a Secure Retirement (WISER) fellow, Linda Stone, testified that women over age 65 outnumber men over age 65 by 5.7 million and that women account for over two-thirds of Americans over age 85. Stone also told the Senate that many of those Americans over age 85 end up close to or in poverty even if they have never been poor before.
She made several suggestions for the Senators to explore that could help women achieve retirement security:
- Investigating the possibility of extending retirement protections for women who spent significant time as caregivers.
- Find ways to encourage employers to offer retirement savings plans that are easy to establish and run.
- Allowing temporary and part-time employees to participate in employer-sponsored retirement plans.
Lower Savings Amounts
The EBRI’s briefing discussed why women tend to save less for retirement than men. It identified several commonly-held beliefs that may account for some of the disparity between male and female retirement savers.
One speculates that the idea of saving for retirement appeals less to women than men. Another suggests that because the finance industry is male-oriented, women feel excluded and are discouraged from participation.
The EBRI also found that women tend to have shorter-term financial planning outlooks than men. Additionally, women are less likely to plan for potentially devastating financial shocks.
According to the authors, the following suggestions can help women increase their savings amounts and improve their long-term financial prospects, which are particularly important given their longer lives:
- Cut back on (or eliminate) the amount of money given to adult children.
- Avoid quitting your job for caregiving duties.
- Take the time to understand family finances.
Lack of Discussion
A 2015 study by Fidelity on women and finances showed that over half of the women surveyed viewed talking about money as “too personal.” 25% reported that they were raised to avoid discussing finances, and 10% said that they didn’t know enough to speak about money intelligently or even understand it.
The Fidelity study also noted that nearly half of the women surveyed said they were hesitant to discuss money and investing with a financial professional. 50% of women who had a primary investment firm reported that they had never spoken to a representative of the firm.
While the unique challenges women face make it more difficult to achieve financial security later in life, developing a strong understanding of individual financial needs and the creation a good retirement plan can help. If you haven’t built a retirement plan, and especially if you haven’t yet spoken with a financial advisor, don’t wait any longer. Request a free, no-obligation conversation with a member of our advisor network today to take the first step towards a financially secure retirement.