How Women Can Plan for Their Retirement Future

Let's give a shout-out to all the women out there for a second—because there’s no doubt that women have been making serious strides lately. Today, more women are getting college degrees than men, and women now make up half of the U.S. college-educated workforce.¹ On top of that, the number of women in executive-level positions has grown from 17% in 2015 to 21% in 2019, while the number of women running Fortune 500 companies is at a record high.^{2, 3}

Those are some great reasons to celebrate. But when it comes to saving for retirement? Well, that’s a different story.

A recent study found that only 12% of women are very confident they’ll be able to retire comfortably. Meanwhile, more than half of women (55%) expect to retire after age 65 or don’t plan on retiring at all.⁴ 

Listen: This is your money and your financial future. It’s time to take charge and start taking some steps that’ll help you move closer to your retirement dreams. You can do this!

The number of women in executive-level positions has grown from 17% in 2015 to 21% in 2019, while the number of women running Fortune 500 companies is at a record high.^{2, 3}

The Challenges Women Face When Planning for Retirement

There are a few unique challenges that women face as they start thinking about saving for retirement. Let’s take a look at the top three:

Challenge #1: Women live longer than men.

The first is that they tend to live longer than men do, usually by an average of six to eight years.⁵ Sorry, fellas—that’s just a fact! That means women probably need to plan to have more money squared away for retirement to cover health expenses and to make sure their nest eggs don’t run dry.

Challenge #2: More women are caregivers.

More women also find themselves in a position of having to look after aging parents or family members who can no longer take care of themselves. Most caregivers tend to be women (60%), which can add a serious financial and emotional strain on them and their families.⁶

If you have parents who are getting older, it might be time to sit down and have a conversation about getting long-term care insurance in place. It’s not a fun conversation to have, but it’s so worth it.

Challenge #3: Women feel less comfortable investing.

According to the Federal Reserve, women are less comfortable managing their retirement investments and making investment decisions than men.⁷  And right now, only a fraction of American women (26%) are investing in the stock market.⁸

It’s no surprise, then, that 3 out of 4 women are at least somewhat worried about their financial future.⁹ So it’s safe to say there’s still some work to be done.

These challenges are real, but that doesn’t mean you can’t have the kind of retirement you’ve always dreamed about.

A recent study found that only 12% of women are very confident they’ll be able to retire comfortably. Meanwhile, more than half of women (55%) expect to retire after age 65 or don’t plan on retiring at all.⁴ 

How Women Can Overcome These Retirement Challenges

There are three things we want you to do as you get ready to start thinking about your retirement future—we call it the “Triple A” approach: assess, acknowledge and activate. Let’s walk through each step one by one.

First, you have to assess your situation. You’re going to have to be honest with yourself about where you stand when it comes to saving for retirement and how much you know about investments. Once you know where you stand, you can figure out how far you have to go.

Market chaos, inflation, your future—work with a pro to navigate this stuff.

Then you have to acknowledge that better is available. Whether you’re ahead of the curve, falling behind, or right on track, we want you to know that you have the power to improve your situation and secure your dream retirement.

And finally, you need to activate your plan of action that’ll help you get to where you want to go. After all, a dream without a plan is just a wish.

Here are some things you can do right now to start moving toward the retirement future you’ve always dreamed of. Whether you’re a woman or a man, young or old, this is advice for everyone who wants to retire someday. 

1. Have a dream worth working toward.

Take a second to think about what you want your retirement to look like. Are you flying to places like Paris or Rome each year? Are you sitting on a beach somewhere with sand between your toes? Are you spending a bunch of time with your grandkids or volunteering around your community?

Whatever it is, you need to have a high-definition picture of what you want to do in your golden years. But you can’t stop there! You need to figure out how much money you’ll need by the time you retire—and how much you’ll need to put into retirement savings each month—so you can have the kind of retirement you’ve always dreamed of. 

2. Get involved in the process.

Your financial future cannot be delegated. Don’t hand off investing decisions to your significant other or anyone else—that goes for both wives and husbands. You guys are a team, which means the both of you need to work together and get on the same page about this stuff.

If you’ve been hands-off when it comes to saving for retirement or anything else that involves your money, it’s time to get back in the game. “Whatever you want to do, honey” is no longer part of you or your husband’s vocabulary! The two of you need to be on the same page when it comes to retirement investing.

And for you single or newly single ladies out there, it’s just as important to work with an investment pro and have a trusted friend or family member in your corner. That way, you can stay engaged and focused on your retirement goals.

3. Learn everything you can about investments.

When folks are struggling with the idea of investing or retirement, it can often be traced back to two things. The first is fear—they’re afraid of investing in the stock market or running out of money in retirement. And the second is a lack of knowledge—they just don’t know where to start. The two often go hand in hand, after all. 

It’s time to face that fear head on. How do you do that? By arming yourself with knowledge. The more you learn about 401(k)s, Roth IRAs and mutual funds, the more confidently you can save for retirement.

You don’t have to be a math professor to get this stuff! Take the time to learn everything you can about investing and saving for retirement. Reach out to an investment professional who will sit down with you and teach you in plain English all about investing.

4. Know your investment options.

When you know what your investing options are and how they work, you’ll feel empowered to make the kind of financial decisions the “future you” will thank you for!

Once you’re debt-free and have an emergency fund in place, we recommend investing 15% of your gross income into tax-advantaged retirement accounts like your 401(k) at work and a Roth IRA. What if you’re a stay-at-home mom? You can open a spousal IRA, which works the same way as a regular IRA and lets working spouses put money into a retirement account for a nonworking spouse.

Is there an element of risk when it comes to investing? Yes, there’s some level of risk. But do you know what’s even more risky? Not saving for retirement at all. Despite all of the ups and downs of investing, the stock market’s historical average annual return is between 10–12%.¹⁰

When it comes to building wealth, slow and steady wins the race every single time. If you consistently put money into retirement savings month after month, year after year, you’ll end up with quite a nest egg for yourself. Don’t let fear keep you from investing!

5. Diversify your investments.

Now, what you don’t want to do is put all of your eggs in one basket. You’ve probably heard the word diversification thrown around when folks start talking about investing. Basically, that just means you’re spreading your money across different kinds of investments.

The first way to diversify your investments is to invest in growth stock mutual funds. Mutual funds let you own bits and pieces of many different companies—not just a single stock. On top of that, we recommend adding another level of diversification by including four different types of mutual funds in your investing portfolio: growth and income, growth, aggressive growth, and international. Boom! You’re diversified!

You’ll want to work with an investment professional you trust to help you choose funds with a proven track record—that means they’re consistently outperforming most other funds in their category over a long period of time, preferably 10 years or longer.

Get help from an investment professional

When you get the right information from the right people—folks you can trust—you can make the right decisions. That’s why we always recommend working with an investment professional who can guide you through your financial journey.

And listen to us: Don’t hesitate to ask questions. A good investment professional helps you get all the answers you need, and there’s no such thing as a dumb question. Remember, this is your hard-earned money—you want to make sure you’re working with someone who is on your side.

Our SmartVestor program can connect you with an investment professional who can sit down with you, answer your questions about investing, and help you start saving for retirement.

Find an investment professional today!