Women are at greater risk of spending all or part of their retirement in poverty than men. The gender pay gap and the difference in life expectancy are two main reasons for this discrepancy. Over their lifetime, the average woman makes less, works less, and is less likely to have full-time employment than the average man, which can directly affect her retirement savings.
Additionally, life insurance data shows that women live an average of five years longer than men. A longer expected lifespan may equate to the likelihood of spending more time in retirement and this is exactly why the topic of retirement planning for women is seemingly more important than ever before.
So, when it comes to retirement goals, women may want to consider a different strategy than their male counterparts.
Retirement Planning for Women
You may have likely heard the arguments on all sides about the gender pay gap. This brought forth the formation of many organizations to help close the gap, but that might not immediately help female investors currently juggling family responsibilities and their retirement savings.
Some retirement portfolio management services often elicit similar advice to all genders, overlooking the issues women face, which could potentially leave them more susceptible to impoverishment than men. While this is not intentional, it’s important for women to keep these differences in mind when planning for their future.
Because female investors are statistically more likely to live at least five years longer than men, a good option would be to have their retirement goals reflect this. A good way to prepare is to save a little extra cushion for any unplanned expenses in retirement.
One of the higher unforeseen costs in retirement is medical expenses. Some investors believe that Medicare programs are designed to cover all their costs. In some cases, retirees may need extra cash or a supplemental plan to have everything covered. Unforeseen healthcare costs may become a more significant problem for women because of their potentially longer lifespan.
Meet Your Retirement Planning Goals on a Limited Budget
Some studies have found that women with families are more likely to prioritize the family’s financial needs—like groceries and college funds—before putting money aside for later. When investors consider putting savings ahead of disposable income spending, they are often better able to save for the future. It may take a little getting used to, but paying for the future first reduces the risk of potential poverty later.
Women at all stages of investing should consider using every retirement savings vehicle available. For example, investors can contribute to both a 401(k) and an IRA simultaneously, both of which utilize pre-taxed money.
Mothers who take time off to have or adopt children and are married can consider saving in a spousal IRA while they are out of work. A self-directed IRA account could allow for more diversification which might accrue wealth faster by investing in alternative assets.
Meet Retirement Goals with Alternative Investments
Investing in alternative assets allows you to diversify outside of traditional market-based products. Some tangible items may be at less risk of losing value in a market meltdown. Take control of your future as you learn more about the retirement possibilities with Digital Trust.*
* Digital Trust, LLC is a custodian of self-directed accounts whose role is nondiscretionary and administrative only. The accountholder must direct all investment transactions and choose the investments for the account. Digital Trust has no responsibility or involvement in selecting any investment. This letter shall not be construed as investment, legal, tax, or financial advice. Please consult with your competent tax advisor and/or legal counsel.