By Michael Vaughn, CFP®
For many women, financial planning involves challenges that their male peers may not experience. Longer life expectancies, career breaks for caregiving, and the gender pay gap are just a few of the factors that can impact retirement planning.
Starting or refining your retirement plan at 40 is crucial to your future well-being. Financial planning supports your long-term stability, and understanding the unique obstacles women face can lead to more informed decisions. Let’s explore some of the key challenges women can overcome and the strategies that can help create a strong, successful retirement plan.
Retirement for Women: Financial Planning Obstacles
Women encounter several issues in retirement planning that may be necessary to consider when preparing for the future.
Longer Life Expectancy
The National Center for Health Statistics shows a big difference between the life expectancies of American women and men. Data from a 2022 study reports that the life expectancy of women in the U.S. averages 80.2 years—a full 5.4 years more than the average life expectancy for men. This indicates that women likely have more retirement time to plan for.
Income Gap
Despite increased efforts to attain equality, women still face a substantial pay gap compared to their male counterparts. As of 2022, American women earned an average of 82% of what men made, limiting their ability to save for retirement. Some women may earn less due to pausing their careers to start families.
Healthcare Expenses
With their longer life expectancy, women may encounter higher medical expenses in retirement than men. These costs may escalate when women need long-term care or treatments for conditions older individuals commonly face.
Lower Social Security Benefits
Because many women have shorter times in the workforce than men, they may receive lower Social Security benefits. As this disparity affects retirement income for women, financial planning is especially important.
Setting Retirement Goals
For both men and women, financial planning is more productive when it reflects a set of attainable goals. Some of the clearest, most reasonable goals include:
- Setting a target date for retirement
- Planning your desired retirement lifestyle
- Evaluating current savings and income
- Assessing future needs with retirement calculators
Circumstances can always change. It’s always worth leaving substantial room for adjustments in your retirement plan. Here are some areas that may need more focused attention.
Maximizing Retirement Contributions
Whenever possible, making the maximum annual contributions to a 401(k) account, traditional IRAs, or Roth accounts can help women grow wealth more quickly. Married women may also rely on spousal IRAs if they experience career gaps.
Investing to Grow Wealth
An investment account can produce significant gains in wealth for the future. It’s always good to maintain a diverse portfolio of several different types of holdings in various sectors and market caps. Tailor your investment strategy based on your risk tolerance, age, and time frame.
Planning for Healthcare
Medicare and long-term care planning are essential to consider before issues arise. Find out about Medicare eligibility requirements, coverage options, and extended care needs in retirement. Starting a tax-advantaged health savings account (HSA) and an emergency savings fund can be beneficial—talk to a financial coach about all your options.
Social Security and Pension Planning
Many women rely on benefits from Social Security or pensions in retirement. You may consider delaying the receipt of Social Security benefits until later in life since that might result in larger monthly payouts. Think about setting up spousal and survivor benefits, if applicable, in case of your passing early.
Professional Financial Guidance for Women Planning for Retirement
Retirement planning is essential for women, requiring careful attention and a strategic approach.
At Pinnacle Family Advisors, I help clients develop personalized, comprehensive financial strategies to support their long-term financial well-being. I’ll take the time to understand your unique circumstances, challenges, and goals, designing a plan tailored to your future.
To get information, schedule a meeting by emailing me at [email protected], calling (417) 351-2942, or using my online calendar.
About Michael
Michael Vaughn is a CERTIFIED FINANCIAL PLANNER® professional and Vice President at Pinnacle Family Advisors (PFA) with 24 years of industry experience. Before joining the PFA family, he served clients with investment management and retirement planning at The Mutual Fund Store for 14 years. Michael graduated from Missouri State University with a bachelor’s degree in business administration and management and earned his CFP® certification in 2004. He also served 20 years in the Missouri National Guard, retiring in 2007 as a Major. He currently volunteers on the board of directors for Good Dads and Fellowship of Christian Athletes. Michael is married to Lori and they have two daughters. To learn more about Michael, connect with him on LinkedIn.