Women have made significant strides in the workplace over the past few decades, yet despite these advances, they face unique challenges in planning for a financially secure retirement. Existing issues such as the longstanding pay gap between men and women have left women with smaller retirement nest eggs and Social Security benefits. The COVID-19 pandemic has exacerbated these issues given that a high percentage of the jobs lost during the pandemic have been in fields dominated by women. The fallout from the COVID-19 pandemic is likely to persist for some time, with potentially dramatic consequences for many women in their critical pre-retirement savings years.
Women face eight unique retirement planning challenges during their working years:
- The income gender gap leads to lower average retirement savings balances for women.
- Different work/life journeys due to caregiving responsibilities can hamper women’s ability to earn income.
- Greater longevity for women means retirement nest eggs must last longer.
- Higher healthcare costs are common for women.
- On average, women suffer from a confidence gap when it comes to investing and managing money.
- Women’s lower tolerance for risk means their money often grows more slowly.
- Women tend to retire earlier than men.
- Women in two-income households are more at risk financially in retirement.
Financial professionals have an important opportunity to help women manage their financial challenges by providing useful guidance on saving enough for retirement, managing their retirement risk, and protecting against outliving their retirement income. This paper explains the unique retirement planning challenges women face and outlines specific steps financial professionals can take to help women navigate and mitigate the challenges at every stage of their financial journey.