Women and Retirement: How to Take the Reins
Understanding how retirement planning looks different for women than it does for men can greatly impact the decisions you make when preparing for the later years of your life. This guide outlines specific things you can do to get ready for your retirement.
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Kim Borwick is a writer and editor who studies financial literacy and retirement annuities. She has extensive experience with editing educational content and financial topics for Annuity.org.Read More
- Updated: October 12, 2022
- 13 min read time
- This page features 9 Cited Research Articles
Saving for retirement as a woman means accounting for factors that don’t typically influence a man’s retirement plan. These may include those “lost” career years spent as a stay-at-home mom and the additional years the average woman lives when compared with her male counterpart.
Whether you’re single, married, raising children, recently graduated or nearing retirement, you need to take control of your retirement planning now.
Throughout this article, women who are on the road to a successful retirement share their valuable experience and advice. Continue reading to learn more about women and retirement.
Why Is Retirement Planning Different for Women?
Statistics show that women typically live longer than men, which means their nest egg has to last longer. This is just one of the unique variables women must consider when planning for retirement.
While it’s not always the case, women often prioritize living expenses, family, debt and real estate over their retirement savings.
Additionally, unlike men, women in the workforce face the challenge of unequal pay. Known as the “wage gap,” this phenomenon is due to several factors, including the fact that many women leave the labor force to raise children and that men have historically been paid higher wages for the same work.
The Gender Pay Gap
The basis of the pay gap is that men tend to earn more money than women for doing the same work. While this isn’t always true, it’s more often than not a reality. The Institute for Women’s Policy Research found that women earned 83% of their male counterparts’ earnings per week in 2021.
Women have made progress over the years in terms of pay equality, but they still have a long way to go. There are, however, a few things you can do to bridge this gap in your own finances.
How to Take Control of Your Retirement
It may seem daunting, but you can improve your financial literacy and build a solid retirement plan. To help you get started, we spoke with several female financial experts who shared a few valuable tips for retirement planning.
1. Empower Yourself With Financial Knowledge
There are many components to financial literacy, but its foundation lies in your ability to manage your money in a way that is most beneficial to you. This includes money coming in from working and money going out for bills or investments — you income and expenses.
Studies have found that the level of financial literacy achieved by women is generally lower than that of men, which makes it more difficult for women to prepare for their desired retirement lifestyle.
Kristin Burton, a practicing physician assistant and owner of Strive Coaching, recommends women take the reins of their finances and empower themselves with financial knowledge.
“There are endless books at the library and free podcasts you can use to learn about the topic,” Burton told Annuity.org in an email. “If you are married, even to a wonderful spouse who loves managing the finances, you can’t assume that your spouse will be able to manage your finances forever. If you are using a financial advisor, you can’t assume that the advice being offered is always in your best interest.”
Whether you’re married, single or divorced, the best way to secure your financial future is to make sure you’re involved in the financial-planning process at each stage.
As Burton explained, “By gaining basic knowledge of the topic, you can ensure your future will be secure.”
2. Use Self-Employment & Passive-Income Opportunities
We often assume being self-employed means owning a large business, when, in reality, self-employment can refer to smaller ventures, such as a side hustle or a hobby you have learned to monetize.
The great thing about self-employment is that, typically, you determine how much money you make by how much effort and time you put into the work.
Passive income can also help you increase your earnings. The idea behind passive income is that you put in the work on the front end and continue reap the benefits with little to no additional effort.
- Income from rental properties
- Dividend stocks
- Digital file sales (printables or templates)
- Stock photo sales
- Cashback from rewards cards
- Online course sales
- E-books sales
Self-employment and passive income can boost your retirement savings and give you more control over your schedule and your finances.
3. Plan for the Long-Term
Retirement planning is a long game. Knowing how much you’ll need for retirement, your strategy for drawing down your 401(k) or IRA, how to invest and balance your portfolio, and how you and your partner can work together to reach your goals are all things to keep in mind.
For example, does it make more sense to invest in the stock market or purchase an annuity? In many cases, it makes sense to do both. In order to make that decision, though, you need to know your long-term goals.
Aviva Pinto, managing director of Wealthspire Advisors, told Annuity.org in an email that women must be aware of different factors in their long-term plan.
“Along with longer lives, comes the need for health care and long-term-care. Long-term care needs to be budgeted for, or long-term care insurance needs to be purchased.” Pinto advised.
“Women should also not forget about their social security. If they have not worked, they can still be eligible for their ex-spouse’s benefits if divorced, or widow benefits if their spouse has passed.”
It’s important to include the cost of the care you may need later in life when calculating the amount of money you’ll need for a comfortable retirement.
Thinking about these things now will help make the process easier in your later years of life.
4. Learn to Negotiate
Negotiation can be one of your most valuable skills when it comes to earning what you’re worth and, subsequently, having the funds to prepare for your retirement.
A 2016 study by Glassdoor showed that 68 percent of women accept the salary they’re offered without negotiating, compared with 52 percent of men. The study also showed that the pay gap was greater for workers over the age of 55, supporting the idea that as men and women age in the workforce, men are more likely to negotiate their salary than women are.
Meg Mara, a millennial money coach and founder of Wholesome Goals, told Annuity.org in an email that the most effective way for women to boost their retirement savings despite the wage gap is to increase their income. She recommends asking for more raises and promotions and negotiating your salary often.
- Do your research. Talk with recruiters, look at salary data for similar positions, and search sites such as Payscale to find the market value of your skills.
- Start at the top of your range. While doing your research, you’ll likely find an average range for your position. When proposing a specific number for a raise or starting salary, start at the top of the range. This gives you more room to negotiate with the other party.
- Prepare your “bragging points.” It’s important to understand what it is you bring to the table and why it’s of value for your current or future employer. Create a list of your relevant accomplishments, and present them to the hiring manager during negotiations as evidence of the value you bring to the company.
- Practice with others. While practice doesn’t always make perfect, it does make a situation more familiar, which can calm nerves and help you prepare for the unexpected. Ask a friend or family member to play the role of the employer as you practice making your case for a raise or promotion.
- Be kind, but firm. In any negotiation, it’s important to be kind and respectful.
- Prepare questions. Asking deliberate questions will help you understand the other party’s pain points and how you can be a part of the solution — or how you’ve already been part of the solution.
5. Open a Retirement Account
Regardless of your marital status, you can open your own retirement accounts at any time. Workplaces typically have an employer-sponsored retirement savings account, such as a 401(k) plan.
If your employer doesn’t offer a retirement plan or you’re self-employed, you can opt to set up a Roth or Traditional IRA. You can also put your money in the stock market or in other investments, such as real estate or business startups.
Married couples have the option of opening a spousal IRA to put extra money toward retirement. This is especially beneficial for families where one spouse has little to no earned income. The working spouse can contribute funds to the IRA for the spouse who isn’t working.
In 2021, you can contribute $6,000 to each IRA account. If you and your spouse both have IRA accounts, you can contribute a total of $12,000 for the year. For those aged 50 or older, the government allows an additional $1,000 contribution per account.
For taxpayers who got off to a late start with retirement planning, the additional contribution — known as a “catch-up contribution” — allows them to make up for some of that lost time.
6. Automate Your Investments
Remembering to place a certain amount of money in a certain account each month can be tedious and very easily neglected. A good way to avoid this is by using payment automation.
Setting up automatic withdrawals will lessen the temptation to spend the money on other things while also getting you in the habit of saving.
The more consistent you are and the sooner you begin, the more you’ll save in the long run. Laura Adams, a financial advisor for FreeAdvice.com, explains that the secret to her success has been putting her savings on autopilot.
“Automation is why workplace retirement plans, such as a 401(k), work so well for participants. Contributions get deducted from your paycheck before you have a chance to spend them on something else,” Adams told Annuity.org.
“You can create a similar system by having the money transferred out of your checking account into an IRA or a savings account as soon as you get paid. Even if they’re small, making consistent contributions goes a long way toward building financial safety nets, such as an emergency fund and a retirement nest egg.”
Automatic payments have become commonplace, so setting this up for your retirement accounts shouldn’t be hard. Contact your financial institution to set up automatic payments or transfers to your retirement accounts.
7. Shift to an Abundance Mindset
Many people think in what has been coined as a “scarcity mindset.” The scarcity mindset says there are only so many resources, so much time and so much money.
However, when you change your perspective, the abundance mindset kicks in. You’re more likely to see the world as a place full of opportunity for everyone, where there is no end to success.
Aysha Turgut, CEO of Grow Wealth Group, recommends that women shift from a scarcity mindset to an abundance mindset. Use money to make money, and value your time more than your money.
By leveraging your earnings to make more money, you’ll set yourself up for a successful retirement. You may also find that more chances to earn additional income are presented to you when you choose to view the world as a place full of opportunity.
8. Keep One Foot In the Workforce
It’s not uncommon for women to step away from the workforce to focus solely on raising their children. Raising a family is an amazing accomplishment, but the reality is that children don’t stay little forever, and once they’re grown, many women choose to go back to work.
Unfortunately, though, women who fail to maintain and develop their skill set during this time find it challenging to return to the labor force.
According to Cecile Hult, a certified financial planner for Argent Bridge Advisors:
“Don’t give up your career! Raising a family is one of the most rewarding and important things in a woman’s life. However, I strongly believe it is important to keep a foot in the workforce. I work with a lot of divorced or widowed women, and many of them struggle with the fact that, while they contributed so much toward their household’s stability, they are no longer able to find a job or revenue source in line with their initial career or education.
Take some years or time off to raise a family, yes. But maintain your education or a connection to your career. Maintaining earning power is essential to be able to save for retirement.”
Maintaining your career network and continuing your education while you care for your family will help you transition back into the workforce.
9. Make Retirement Planning a Priority
Let’s face it: Life is busy, and there are so many places to spend your hard-earned money. This, paired with the fear of making a wrong move, can delay your retirement planning.
Allyson Dennon, owner of Fab Life Now and an accredited financial counselor, advises, “The one thing that can set women up for success in retirement is to start today. Women tend to delay their financial moves due to a lack of knowledge or fear. The best advice I can give is to start now. It doesn’t have to be complicated. If your company offers a 401(k) or similar, start there.”
Retirement may not be the most exciting thing you can put your money toward, but in the end, it will be the most rewarding. The sooner you begin, the more your money will be able to work for you.
No matter your age or life situation, making your retirement plan a priority is one of the best gifts you can give your future self.
Avoiding Retirement Planning Regrets
It’s always easy to look back on things you should have done better or ways you could have improved. Knowing this, we talked with a few experts in the financial field about the most common retirement planning regrets, and how you can avoid them.
- Not being involved in the retirement planning process with a spouse or partner:
- Many women let their partner take the reins when it come to finances, but it’s important to be involved in the process.
- Not asking questions or working with a professional:
- Asking questions, particularly when speaking to experts and professionals in the field, will give you a solid foundation in personal finance and financial literacy.
- Waiting to save until debt is completely paid off:
- While paying off debt is important, growing your retirement savings simultaneously can be beneficial in the long run. Work with a professional who can show you how to balance debt payments and retirement savings.
Understanding their unique challenges when it comes to planning for retirement can help women take control of their financial health, now and in the future.
Becoming more financially literate, learning to negotiate and keeping a foot in the workforce while raising a family are all viable strategies for women in various stages of their careers and lives.
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9 Cited Research Articles
Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.
- Adams, L. (2021, May 3). Personal communication.
- Burton, K. (2021, May 1). Personal communication.
- Dennon, A. (2021, April 30). Personal communication.
- Glassdoor. (2016, May 2). 3 in 5 Employees Did Not Negotiate Salary. Retrieved from: https://www.glassdoor.com/blog/3-5-u-s-employees-negotiate-salary/
- Hult, C. (2021, April 30). Personal communication.
- Institute for Women's Policy Research. (2022, March 15). Equal Pay Day 2022: Despite Wage Gains in Recent Months, Women Still Earn Just 83 Percent of What Men Make Across Most Sectors and Occupations. Retrieved from https://iwpr.org/media/press-releases/equal-pay-day-2022-despite-wage-gains-in-recent-months-women-still-earn-just-83-percent-of-what-men-make-across-most-sectors-and-occupations/
- Mara, M. (2021, May 3). Personal communication.
- Pinto, A. (2021, April 30). Personal communication.
- Turgut, A. (2021, May 3). Personal communication.