Women Aren’t Ready to Retire, But There Are Ways to Prepare

Why It Matters:

• Compared to men, women may have less savings and earning potential.

• Women tend to live longer and could need more money in retirement.

• More women are counting on a self-funded retirement.

• Most women make career development and personal health top priorities.

Melissa Komadina tkc.profilePicture Written by: Melissa Komadina | Transamerica
March 25, 2019

4-5 Min readClock Icon

Women are less likely to feel confident about having a secure retirement compared to men, and half of them plan to work after age 65, according to the latest survey from the nonprofit Transamerica Center for Retirement Studies®. While many women continue to work because they enjoy their careers, other women work out of necessity or concern they will not have adequate funds to support themselves through their retirement.

Although most women are saving for retirement and expect their retirement to be self-funded, they tend to have far less saved than men and are far less prepared for unexpected early retirement or emergencies, according to the study’s authors. The median amount of total household retirement savings for women is $34,000 versus $115,000 for men.

The study also revealed that while a majority of women and men are planning to work in retirement, their respective strategies for continuing to work differ. Women are putting more emphasis on staying healthy and performing well at their current job, while men tend to focus more on networking and finding opportunities within the job market.

A majority of women (57%) cited “information that is easier to understand” as the best way to get motivated to learn about saving and investing for retirement. Here are tips for taking action based on the results of this study, as well as some tools and resources to get started.

Saving more – and earlier – is key

The sooner you begin saving, the better. Although 72% of women are saving for retirement, the median age women start saving for retirement is two years later than men, which means most men accrue an additional two years’ worth of interest.

If you don’t have any retirement savings, don’t get discouraged – resolve to start today. Even if you can save only a little, every bit saved will gain interest over time. For example, saving just $20 a week could yield $72,600 in 30 years (assuming a 5% annual return).

When it comes to a long game like saving for retirement, consistency matters. The best way to trick yourself into saving consistently is to automate your finances. Set up regular automatic transfers from your checking account to a Roth or traditional IRA. You’ll be surprised how quickly savings can add up when you don’t have to remember to set them aside.

Find “free” money

Enroll in your employer’s retirement program (if you haven’t already), and if they offer a match on your contributions, make sure you’re getting the maximum match percentage. In other words, if your employer matches your contributions up to 6%, opt to save 6% of your paycheck for your retirement plan – otherwise, you’re leaving free money on the table.

And speaking of free money, find out if you’re eligible to claim your Saver’s Credit when you file your federal taxes.

Figure out how much money you need to retire

While most participants in the TCRS survey agreed they needed at least $500,000 in retirement, women are far more likely to have “guessed” at that figure. They use savings calculators and other tools to get an accurate estimate, the study said.

A free tool like Kiplinger’s Retirement Savings Calculator will give you a good idea of how much money you need to save. From there, calculate how much money you need to save per year, then per month.

Although that number might seem intimidating at first, remember retirement is a goal that needs to be broken down into smaller chunks to feel attainable. And again, the most important thing is to save as much as you can – but have a clear goal to aim for.

Talk openly about your financial strategy

Money is a major source of stress in American relationships, but not talking about it makes it worse. Furthermore, leaving your financial and retirement planning in the hands of another person can put you in a vulnerable position in the case of an unforeseen separation, divorce, or loss of a partner.

Start the conversation with the important people in your life around daily expenses and budgeting, and discuss your long-term vision: What do you want your retirement to look like and how much money do you need for it? If you’ve calculated how much savings you’ll need, you’ll have real numbers to share.

Part of these ongoing conversations should include caregiving and other financial support for family members. Talk with your siblings and other relatives about who will support an aging parent or relative with a medical condition, for example, and how much support you’ll be able to contribute. Also consider the impact of taking time off to be a caregiver versus scaling back your work hours. Working part-time instead of completely taking time off may put you in a better financial position long-term.

Create a backup plan

Unforeseen expenses (like major car or home repair, or medical bills) or sudden unemployment can put a real dent into your saving strategy if you don’t have an emergency fund to tap. The TCRS survey revealed men have a median $10,000 in emergency savings, compared to a median $2,000 for women. The solution? Like retirement savings, automate a portion of your paycheck to be deposited into a savings account for emergencies. Personal finance professionals suggest saving three to six months’ worth of expenses depending on your financial and familial obligations, but as we’ve already mentioned, any savings is better than no savings.

Never stop learning

Besides doing well at your job and keeping yourself in top health, learning new skills and keeping existing ones up-to-date is critical to staying competitive in your career. Plus, it could open new doors or lead to discovering new interests.

There are traditional ways to keep your skills sharp like taking classes at colleges and universities (many offer online courses). Online learning sites like Lynda and Pluralsight offer courses from computer programming to business leadership. These are great ways to explore a possible career transition or simply get an overview of a subject outside your role or industry. Check with your employer or even your local library, as they might already have a membership that would give you free access.

About Transamerica Center for Retirement Studies®
Transamerica Center for Retirement Studies® (TCRS) is a division of Transamerica Institute®, a nonprofit, private foundation. Transamerica Institute is funded by contributions from Transamerica Life Insurance Company and its affiliates and may receive funds from unaffiliated third parties. For more information about TCRS, please refer to www.transamericacenter.org.

Things to Consider:

• Figure out how much money you need to save for retirement, and make a plan to start saving with your employer-based 401k and/or IRA accounts.

• Set up automatic transfers to your retirement and emergency savings accounts. You can always change the amounts (or frequency) of these transfers, but once they’re set up, you won’t have to actively think about saving.

• Check in with a retirement planning professional to go over your financial strategy and get your questions answered. Having this knowledge will help you feel confident in how you’re taking action, even if you’re not quite where you need to be yet in terms of saving.



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