Why Your Dad’s Retirement Plan Might Not Work For You

by Autumn Nessler

Financial Frequency. myInspiration

May 3, 2019 . 2 min read

Retirement planning can be very different for men and women. These are the main differences you need to know so you can plan for a financially stable retirement.

When it comes to my coaching practice, I gear most of my focus on women.

"Why?" You ask?

One of several reasons for doing so is

Because a woman’s retirement is very, very different than a man’s.

  And through extensive research and consulting with retirement experts, I've come to find that when it comes to retirement planning, women and men face very different circumstances and issues.

Here are some of the things that I learned and consider critical when it comes to understanding the differences between women's and men's retirements:

1. Women Have to Work Longer to Fund Their Retirement

"Why?" You ask?

Research shows that women are entering the workforce later and taking time out to raise children or care for aging parents (average of 12 years total time out of the workforce). The results of doing so include:

  • Loss of income
  • Lower contributions to employer-sponsored retirement plans
  • Social Security

Disproportionately, women are seeking jobs, both full and part-time, that offer flexibility because of caregiving responsibilities. Many of these jobs do not offer a retirement savings plan.

And because we tend to live longer (4-7 years longer), our costs for doing so, especially health care, are higher than a man’s. Also, there is an 80-90% chance we will be solely responsible for our retirement finances due to divorce or widowhood.

For all of the reasons above, women are finding it necessary to spend more time in the workforce than their male counterparts to feel financially secure in their retirement.

For more facts on women and retirement, visit: transamericacenter.org

2. Women Have Less in Retirement Savings

"Why?" You ask?

Firstly, we make 80% of what a man makes for the same job. Less income means fewer savings opportunity in Social Security and Employer-Sponsored Retirement Plans.

Secondly, men most frequently cite saving for retirement as their highest financial priority. For women, the top financial priority is,

Just getting by — covering basic living expenses

We are also predisposed to take care of other’s needs rather than saving for our retirement.

Finally, if we are saving for retirement, the National Institute on Retirement Security suggests we may be more risk-averse than men. What this means is women are more likely than men to invest in riskier investment opportunities that can provide a higher return.  

Taking into consideration all of the above, including being risk-averse in our investments means less in our retirement fund.

To learn how to trim the retirement savings gag, visit: cnbc.com

3. Women May Find Finances Intimidating

"Why?" You ask?

Today, in most households, financial responsibilities are divided up.

We are letting our spouses take the lead in long-term financial planning because we lack confidence in that area. We oversee the family budget/household maintenance.

This perceived gap in financial literacy leads us to a variety of not-so-great decisions. Here are just a few:

  • We don’t take full advantage of our employer-sponsored retirement plans
  • We underestimate our financial needs for retirement
  • We under-invest in stocks and tax-favored assets, leading to disappointing long-term returns
  • We fails to seek ongoing opportunities that allow us to build financial literacy

With that in mind, women and retirement not only offer up unique challenges but they require specific needs, planning (both financial and non-financial) and more importantly, beautiful opportunities! To learn more about how to take control of your retirement, visit: retirementrevised.com