Many women have considerably less income in retirement than men. According to the National Institute on Retirement Security, women are 80% more likely than men to be impoverished at age 65. Here we outline some of the reasons for this situation and give tips on how to make sure women are financially prepared for retirement.
Part of the solution lies in understanding how this happens. Why do so many women end up financially compromised when they reach retirement age? There are several key factors:
- On average, women earn less, so they have less money to save for retirement.
- Many women take time off to raise children or to care for an aging parent, which means they are not contributing to workplace retirement savings programs or pensions during that time.
- Women generally live longer than men.
- Women often put other's needs before their own.
Closing the gap
Here are some steps women can take to help close the retirement savings gap.
Make sure to put aside money in a retirement savings plan such as a 403(b) plan. If you have a plan, be sure to know the associated fees you are paying. High fees erode savings.
Make sure to have an emergency savings account so that when unexpected emergencies arise, retirement savings aren't used.
Live a healthy lifestyle so that medical expenses don't add up and compromise your finances. Make sure to review your insurance policies on disability so you have coverage if there is an emergency.
Because women generally live longer, it makes sense for women to work a little longer and delay retirement to help preserve savings.
The interest paid on debt such as credit cards has a corrosive effect on financial security. This is especially true with high-interest debt for things like credit cards, personal loans, and auto loans.