5 Ways Retirement Planning Is Different for Women

Despite the current trend toward erasing differences between genders, the fact remains that women and men are not equal in all things. When it comes to retirement planning, things are particularly different for women — especially in these five ways:

1. Women live longer — so they can’t wait to plan

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Living longer may seem like a good thing, but it can be expensive. A man reaching age 65 today can expect to live until he is 84, according to the Social Security Administration. However, a 65-year-old woman can expect to make it to age 86.5.

Those 2 ½ years might not sound like a lot, but they are a big deal when it comes to saving enough for retirement. So, start planning your retirement right now.

You can’t know if you’ll be able to retire happily ever after if you don’t know what happily ever after looks like for you. So this is your chance to dream. Pull out a pen and paper and jot down your answers to the following:

  • At what age do you want to retire?
  • Will you work part-time after quitting your full-time job?
  • Do you want to travel? If so, where and how?
  • Will you move to a new home, city or state in retirement?
  • What other hobbies or activities will fill your time?
  • Roughly how long do you think you’ll live considering your health and the life expectancy of your family members?

This is the fun part. Write down your idea of a perfect retirement. We’ll bring you back to reality in a moment.

2. Women save less — so they often need to ‘catch up’

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Women are likely to have less in savings than their male counterparts.

That is in part because women are more likely to take time off from work to do the job of raising children. Indeed, the U.S. Department of Labor reports only 56.8% of women who are of working age participate in the labor force. That compares to 69.2% of men.

If you haven’t saved enough up to this point in your life, it’s time to get serious. First, figure out how much retirement is likely to cost. For the best estimate, visit a financial planner. A planner will have the knowledge and software needed to give you a realistic number.

If paying for a consultation with a planner isn’t in the budget, you can use an online calculator instead. MSN and AARP offer these tools. Calculators can give you a rough estimate of how much you need to have saved for retirement, and it’s helpful to play around with the numbers.

3. Women don’t always make retirement a priority — but they should

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According to the 18th Annual Transamerica Survey, only 51% of working women — compared with 62% of working men — cite saving for retirement as a financial priority. That may be because 41% of working women say their biggest financial priority is “just getting by — covering daily expenses.”

Even when they do save, women only put a median contribution rate of 7% of their annual income into a 401(k) while men are putting in 10%.

If you haven’t been saving for retirement, it’s time to let reality set in. Take a look at your current income and savings situation. Are you on track to save enough to hit that magical number needed to make your retirement plan a reality?

Again, a financial planner makes this process easy. If you don’t have one, you’ll have to fire up the calculator and crunch some numbers yourself. The calculators above can help too.

4. Because they haven’t saved, women may need to adjust expectations

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Because many women haven’t saved enough, they likely won’t have enough money to make all their dreams come true, let alone get through 20 years of retirement comfortably.

But that’s OK. You can still have a rich retirement — if you’re flexible.

Ideally, you can ramp up savings and still have much of the retirement you want. However, if you work in a low-income job or are close to retirement age, saving enough might not be possible. Instead, consider whether you can do the following to stretch your retirement dollars further.

  • Can you work longer to save more?
  • Can you delay the start of Social Security benefits? You get an 8% boost in your monthly benefit amount for every year you delay from your full retirement age until age 70.
  • Can you limit your retirement travel?
  • Are there less expensive living options available?

If your means are limited, you may have to adjust your lifestyle in retirement right from the start. That can be disappointing, but it’s less disappointing than realizing you’ve run out of cash at age 75.

5. Women may feel discouraged — but they can still achieve their dreams

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Does your personal savings picture look a bit unfocused? Don’t give up hope! Assuming you’re still in the workforce and a few years away from retirement, now is the time to get serious about ditching the debt and saving money instead.

While there are plenty of places to stash cash, you’ll want to look to your company’s 401(k) plan first. Many employers will match contributions, up to a certain percentage. That means you may be able to instantly double the deposits into your retirement fund, at least up to a certain point.

If your company doesn’t have a 401(k) benefit, opening an IRA is the next best thing. You won’t get any match on your contributions, but you do get the tax benefits.

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