Retirement Planning for Women

Retirement Planning for Women
Retirement Planning for Women

Living Longer Means Saving More

Women tend to live up to six years longer than men, on average. Scientists – as well as comedians! – have many explanations for the disparity. For women, though, longevity means more than scoring points in the battle of the sexes. It means they need to be more financially prepared for retirement, while overcoming numerous financial obstacles.

A different road to retirement

With a longer life expectancy than men, women will most likely have more time to enjoy their retirement. But, while living longer is clearly a positive, it also means women have a greater possibility of outliving their retirement savings. Plus, a number of factors put women at a distinct disadvantage when it comes to accumulating enough money for their retirement.

Such obstacles mean retirement planning for women often takes a different path than that of men. The bottom line is that women need to take control of their financial future by saving more for retirement.

Female’s financial obstacle course

Among the many real financial obstacles facing women on their road to retirement are:

  • Women earn less – On average, women earn about 77.8 cents for every dollar men earn, which means they have less money to invest during their careers.1
  • Women spend less time in the workforce – Women are far more likely than men to take time from their careers to tend to family responsibilities, which translates to lower overall career earnings to invest.
  • Women are less likely to have retirement plans – Because so many women work in part-time jobs or for employers that don’t offer retirement benefits, fewer have defined benefit pension plans. And those with plans have smaller pensions because of less time in the workforce. Women are also less likely to participate in 401(k) plans because of lower compensation.1
  • Women have lower Social Security benefits – Lower income and less time in the workforce also means lower Social Security income which is a potentially significant blow. In 2007, for unmarried woman age 65 and older, Social Security comprises 48% of their total income in contrast to 37% for unmarried elderly men and only 30% for elderly couples.2
  • Women live longer – A longer lifespan means women not only need to save more for retirement, but also should consider the impact of the health care costs associated with the spouse who dies first.

1 U.S. Women's Bureau and the National Committee on Pay Equity, 2007.
2 "Social Security is Important to Women" October 2008.

Think about your future

Despite the potential shortcomings in retirement, women often put off their retirement planning. The truth is, you’ll most likely need to fend for yourself at some point in retirement – and the longer you put off planning, the greater the chance you won’t have enough savings.

The best place to start is to envision where you’d like to be. Think about how you want to spend each day, where you want to live, how often you want to travel. A clear vision of how you want to spend your retirement will help motivate you to take the necessary steps to reach those goals.

Take stock of where you are

One of the first steps to meet your retirement goals is to take stock of where you are financially, then assess how you might be able to spend less so you can save more.

Ask yourself the following:

  • How much do you spend each month? 
  • How much debt have you accumulated? 
  • Do you have an emergency fund to cover three to six months? 
  • How much have you saved? 
  • How much more could you save if you spent a little less?

Once you’ve established how much – if any – money you can free up, you can then determine the best place to put that money. Keep in mind that a few small sacrifices now can add up to a lot more later. 

Both Sondra and Donna earn $50,000 per year, but Donna decides to save $125 more per month


Annual salary



% of salary deferred per month



Amount of salary deferred per month



Time period

15 years

15 years

Total contributions



Total savings



Donna saves nearly $36,000 more than Sondra!

Put your money to work

Most companies offer tax deferred retirement investment plans, such as 401(k), 403(b) or 457 plans – all of which are excellent vehicles to invest for your future. Be sure to not only participate in your employer’s plan, but to contribute as much as you can afford. The power of tax-deferred compounding can really add up.

As the chart shows, even with a 6% rate of return over 15 years, deferring 3% more of your salary can increase your savings significantly.

Preparing for your future

A few other tips to consider when planning for your future:

  • Make retirement plans a priority – When searching for a new job, consider sacrificing some current salary for a good retirement plan. Also consider employers that will match part or all of your plan contributions.
  • Talk to your spouse – Simply talking to your spouse can help get your retirement planning on track. It’s important to have a conversation about what your retirement needs will be and how much it will cost you each month.
  • Understand the effects of divorce – If you divorce, know how it impacts your retirement planning. For example, if you were married for at least 10 years, you are entitled to Social Security payments equal to 50% of your ex-husband’s benefits (although you lose that right if you remarry). And any share of your ex-husband’s pension or 401(k) plan must be negotiated as part of the divorce settlement.
  • Make smart investment decisions – Educate yourself about the different investment vehicles to help reach your retirement goals and carefully consider how much risk you are willing to take to potentially earn higher returns.

A plan for spending later

Planning for your retirement is just part of the process. Since you’ll likely be retired for 20 to 30 years, you’ll also need to consider how you’re going to maximize your resources during your retirement, as well. A key to spending wisely in retirement is to organize your resources. First, create an emergency fund that could cover up to six months worth of expenses. Then divide the remaining assets into three categories:·

  • Short-term money – Covers the necessities, such as food, housing, utilities, taxes, health care, insurance and emergencies. Potential sources include Social Security, pension, part-time income and rental income.
  • Mid-term money – Covers the niceties, such as travel, entertainment, house/car repairs and education. Potential sources include retirement plans, interest/dividends, IRAs, home equity, employment income and bank savings/CDs.
  • Long-term money – Includes money that might grow to help replenish the other categories or compensate for inflation and longevity protection. Potential sources include long-term stock investments, long-term bond investments and any other type of financial investment.

Throughout your retirement, you may need to shift your resources as necessary to make up for any shortfalls in any one particular area. This program is not intended to be a financial planning service, investment advisory service or deliver a financial plan or any portion of a plan. Should you wish to take advantage of a full financial plan or obtain investment advice, please contact your financial planner or investment advisor for more information.

Taking control of your future

While the gap in earnings between men and women is shrinking, years of disparity has put women behind in terms of retirement savings. Other factors, such as longer life expectancy and less time in the workforce, have also put women in a position to play catch up. By understanding your retirement needs, saving more and developing a sound plan, you can take control of your financial future. To learn more about how to make the most of your retirement savings, contactyour ING representative.

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