- Posted by Linda Powers
- On November 23, 2016
- 0 Comments
- financial literacy, Gender Pay Gap, LiSA Initiative, Retirement Gender Gap, Senior Women
The financial challenges senior women face in their retirement years are significant. Careful planning and course-correcting adjustments are key to financial security.
Managing your finances to avoid outliving your savings can be difficult. Sadly, it’s more of a concern for women than it is for men. As they grow older, the financial challenges senior women face become more critical. To maintain a quality of life in their remaining years, they must take pro-active steps.
Why Is this Important for Women?
In general, women have been, and currently are, at a financial disadvantage:
- They earn less. Women earn 80 cents for every dollar earned by men.1
- They move in and out of the workforce. Women are more likely to leave their careers in order to raise children or care for aging parents.
- They may not have enough saved for retirement. Women tend to work for smaller companies. Many do not offer company-matching retirement savings plans, if they offer a plan at all.
- Whether by choice, divorce or widowhood, many women will find themselves on their own. As they age, the likelihood that women will be single at some point from age 65 onward increases.
Make Adjustments to Financial Plans
Earning and saving less overtime, “women are twice as likely as men to live below the poverty line during retirement.”2 That’s not to say that every senior woman is destined to a life of poverty. It means women need to adjust their financial plans to have enough income for their golden years.
Here are steps to take to build a nest egg that will meet future needs:
- Review your budget. How much are you spending and what are your projected costs? Look closely at your spending habits and what you’ll need in the future. That will offer some concrete numbers to help establish your savings goals.
- Budget for higher health care costs. Women live five years longer than men.3 It’s critical to plan for co-payments, deductibles, medication, and assisted living care that may not be covered by insurance plans.
- Purchase long-term care insurance. This is especially important for women who may not have people to care for them later in life.
- Set up an emergency fund. Don’t let all your planning and saving efforts be derailed by an emergency. A savings account will do the job. Choose one that offers fast, easy access without penalties for early withdrawal.
- Meet with a financial advisor. You don’t have to be wealthy to work with a financial advisor. Their job is to put you on a plan to achieve financial fitness. Together, you can create a plan that works for your individual reality.
- Postpone your retirement. By waiting just a few years to collect your benefits, you can increase the amount of your future monthly payments. Use these additional years to curb spending and save as much as possible.
The financial challenges senior women face in retirement can be avoided. By understanding the obstacles, they can take advantage of opportunities to overcome them. This allows them to a build an income stream, live comfortably and preserve their quality of life.
1 Ariane Hegewisch, Asha DuMonthier. “The Gender Wage Gap: 2015; Annual Earnings Differences by Gender, Race, and Ethnicity.” Institute for Women’s Policy Research. September 2016. http://www.iwpr.org/publications/pubs/the-gender-wage-gap-2015-annual-earnings-differences-by-gender-race-and-ethnicity
2 Melanie Hicken. “Why Many Retired Women Live in Poverty.” CNN Money. May 13, 2014. http://money.cnn.com/2014/05/13/retirement/retirement-women/
3 “USA LifeExpectancy.” http://www.worldlifeexpectancy.com/usa/life-expectancy-female
4 “The Pay Gap’s Connected to the Retirement Gap.” WISER Women’s Institute for a Secure Retirement. http://www.wiserwomen.org/index.php%3Fid%3D266%26page%3Dpay-gap-retirement-gap