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Retirement Planning Considerations for Women

Brought to you by: Beacon
Share current LOB: PersonalBanking

When it comes to retirement, women face some special challenges.

On average women live longer than men. But they spend less time in the workforce and are more likely to work part-time.

 

Life span at birth

Women: 81.1 years

Men: 76.3 years          

 

Percentage who work part-time

Women: 27%

Men: 11%

 

Sources: National Center for Health Statistics, Bureau of Labor Statistics

 

 

Throughout her lifetime the average college-educated woman earns about $600,000 less than her male counterpart. That means less opportunity to save for retirement.

 

Lifetime earnings for college graduates

Women: $1,939,000

Men: $2,593,000

 

Source: Georgetown University Center on Education and the Workforce

 

 

On average women earn less money from employer-sponsored investment plans such as pensions. Women’s lower lifetime earnings also mean lower Social Security payments too.

 

Average annual retirement income from pensions and annuities

Women: $8,040

Men: $13,200

 

Average Social Security benefit for people 65 and over

Women: $12,700

Men: $16,700

 

Sources:  Employee Benefit Research Institute; U.S. Social Security Administration

 

 

No wonder women are more worried about having enough money for retirement than men.

 

Percentage who feel very confident they have enough money to live comfortably in retirement

Women: 10 %

Men: 17 %

 

Source:  Employee Benefit Research Institute

 

 

Fortunately women can take steps to improve their retirement outlook.

 

Percentage who agree that becoming more financially knowledgeable improved their quality of life

All women: 67%

Single women: 71%

Married women: 63%

Divorced women: 70%

 

Source:  Allianz Women, Money, and Power Study

 

 

Start early.

 

Thanks to the power of compound interest, investing $200 a month for 15 years starting at age 25 adds up a lot quicker than the same money invested at age 40.

 

Total savings at age 65

Woman who contributes $200 a month from age 25 to 40: $376,897*

Woman who contributes $200 a month from age 40 to 55: $136,605*

Take advantage of your company’s workplace retirement plan: Contribute as much as you can—at least enough to maximize any company matching funds.

 

*Assumes a hypothetical 7% return.

 

 

Your salary: $50,000

Your annual contribution, 5% of salary: $2,500

Your annual contribution, 5% of salary + 3% company match: $4,000

Talk to a financial advisor. Getting professional financial planning advice can help ensure that your portfolio fits your age and retirement goals, which is especially important since women tend to be conservative investors.

 

 

Percentage who feel “right on track” for meeting their retirement goals

Women with advisors: 36%

Women without advisors: 18%

 

Source:  Prudential Research Study, “Financial Experience & Behaviors Among Women.”

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Longer lifespans and lower average earnings mean women must think differently and save more for retirement. Talk to a financial advisor to improve your retirement outlook.

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

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