From National Women's Day in South Africa to Women's Equality Day here in the U.S, across the globe, the month of August holds particular significance when it comes to the power and progress of women. However, the current health and economic crisis has a severe impact on women’s financial and retirement security. Here’s why a number of other financial priorities can get in the way and how to overcome them.
Breaking Down Barriers
Women face unique challenges in preparing for their retirement, making it essential to address these issues proactively.
While progress has been made in gender equality, women still face unique financial empowerment challenges. Bank of America recently released research findings on women and financial wellness, revealing that 94% of women anticipate personal responsibility for their finances at some point in adulthood. Yet only 48% of women feel confident about their financial situation, and just 28% feel empowered to take decisive action.
These numbers aren't too surprising given their specific retirement planning challenges. Some of which include:
- Women are often the caregivers: Some 20% of all women workers in the U.S. are family caregivers, meaning women must balance both traditional employment and familial caregiving needs.
- Women live longer: Women typically live about six years longer than men; U.S. women have a life expectancy of 79.3 years, while men have a life expectancy of 73.5 years. This difference means that women must often make their retirement savings last longer.
- Women face higher healthcare costs: According to the Retiree Health Cost Index, a 65-year-old woman retiring today should expect to spend about $155,000 on healthcare, versus the $134,000 that a 65-year-old man can expect.
- Women collect less in Social Security: Because many women are caregivers for children or family members, they experience at least $16,000 in lost wages annually because of the “motherhood wage gap.” At the same time, women are typically paid 83.7% of what men are paid.
- Women can be more unprepared: Lower lifetime earnings and decreased Social Security benefits are reflected in women’s retirement contributions, on average 30% less than men. As well as retiring earlier for caregiving needs, half of women have no personal retirement savings, compared with 47% of men; and 22% of women have $100,000 in savings, versus 30% of men.
As you can see, several unfair barriers impede women's journey toward financial empowerment, including gender pay gaps, limited access to education and employment opportunities, societal expectations, and cultural biases. It is crucial to address these systemic issues to foster financial inclusivity and equality. Let's delve deeper into some strategies for women to overcome these barriers and attain financial wellness.
Long-term Financial Strategies
When it comes to empowering retired women financially, implementing effective long-term financial strategies is crucial. Retired women should establish clear retirement goals and envision the desired lifestyle they aim to achieve during their post-work years. Setting specific goals provides a roadmap for financial planning and enables them to allocate their resources accordingly.
Diversifying investment portfolios is another crucial aspect. You can help mitigate risk and maximize potential returns by spreading investments across asset classes such as stocks, bonds, real estate, and mutual funds. This strategy helps reduce the impact of market volatility and increases the likelihood of long-term financial growth.
Healthcare expenses often pose a significant financial burden in retirement. To proactively address potential healthcare costs, you should explore options like long-term care insurance, health savings accounts (HSAs), or Medicare supplement plans. Understanding and incorporating these expenses into their plans can help maintain financial security and peace of mind.
It's crucial to remember that each individual's financial situation is unique. Seeking guidance from financial advisors who can provide personalized advice based on specific needs and goals is highly recommended. By implementing effective long-term financial strategies, you can take control of your economic well-being, enjoy a comfortable retirement, and experience greater financial security in the years to come.
Education and Awareness
One of the first steps towards empowering retired women financially is providing them with access to quality education and raising awareness about financial literacy specific to their retirement years. According to a financial literacy survey conducted by the TIAA Institute, women, on average, they answered only 45 percent of personal finance questions correctly.
Retirement comes with unique financial considerations, and retired women should have the knowledge and skills to navigate this phase successfully. Programs and initiatives focusing on retirement planning, managing pensions and savings, and understanding healthcare costs can play a pivotal role in empowering retired women to take control of their financial well-being.
At Agemy Financial Strategies, we have a whole library of free online educational tools and resources to take advantage of. From informative financial blogs to educational YouTube shows and radio podcasts, it's never too early—or too late—to start taking charge of your personal finances.
Access to Financial Services
In pursuing gender equality, addressing retired women's limited access to retirement-specific financial services is crucial. Many retired women may face challenges in managing their retirement savings, making informed investment decisions, and accessing suitable insurance and healthcare options. Therefore, improving retired women's access to retirement-specific financial services is essential for their economic security.
Research indicates that many working women need to catch up in their retirement savings, with nearly two-thirds (62 percent) falling short compared to 48 percent of men. This disparity highlights the need to prioritize women's access to retirement savings accounts and participation in formal financial systems.
By encouraging retired women to seek professional advice and explore retirement-friendly financial products, we can enhance economic security and help ensure a comfortable retirement.
Building Supportive Networks
Establishing women's networks in financial and retirement planning is crucial for several reasons. These networks provide a supportive and inclusive space where women can freely discuss their unique financial challenges, concerns, and goals. By sharing experiences and knowledge, women can gain valuable insights and learn from one another's successes and mistakes, empowering them to make informed decisions about their finances and retirement.
By joining forces, women can raise awareness of gender-based financial challenges, such as wage gaps, unequal access to opportunities, and biases in the financial industry. Together, they can advocate for policy changes and reforms that promote economic empowerment and equality. Additionally, access to mentors in the financial and retirement planning fields can inspire and guide women in achieving their financial goals.
Working with a Financial Advisor
Working with a knowledgeable and experienced financial advisor can be a valuable resource for retired women on their financial journey. A financial advisor can provide personalized guidance and create a comprehensive retirement plan catered to you. At Agemy Financial Strategies, our financial advisors can help you with the following services, crafted to your unique needs and retirement goals:
- Managing Retirement Savings.
- Optimizing Investment Strategies to preserve and grow wealth.
- Creating a sustainable withdrawal strategy.
- Lifestyle Management.
- Estate and Legacy Planning.
Women face unique challenges when it comes to planning for retirement, but these challenges don’t have to derail your plans. By breaking barriers, providing education, and improving financial access, we can pave the way for women to achieve economic independence and contribute to a more inclusive and prosperous society.
Allow our advisors to assist you in shaping a future where all women are equipped with the necessary tools, resources, and opportunities to prosper financially and realize their full potential.