Financial Tips for Women: How to Prepare for Retirement

How Women Can Better Prepare Financially for Retirement

woman with financial paperwork

Why should women think about saving?

Did you know women workers have less than half of the total household retirement savings than men do, with an estimated median of $57,000 versus $118,000. This gap becomes even more troubling with the understanding that women tend to live longer than men. There are two top reasons why:

  1. Women are paid less than men. Women are paid 83 cents for every dollar men earn, and that gap is even bigger for women of color.
  2. Women take more time off from work for care giving responsibilities. Women are more likely than men to take time off from work to take care of children or other relatives. This leads to lower overall contributions to Social Security, leaving them with less retirement income from this source.

Savings Solutions for Women

There are 3 key solutions to close the financial gap and ensure financial preparedness and stability as one nears retirement:

  1. Review your earnings situation. If a woman thinks they can do better, they should consider looking for a better-paying job; ideally one with a 401k plan or something similar to boost their savings, even if it’s a part-time job or a self-employment option. If married or living with a partner with whom financial savings and goals are combined, make sure you understand the family’s financial situation and stay up to date on the family’s finances.

  2. Plan Early, Have a Goal, Make a Budget. Prepare a budget. Track monthly expenses so you know on average how much you spend on necessities like rent or mortgage, food and utilities, and have an idea of what you think you will need to spend monthly in retirement. Multiply that by 12 months, and then again by the number of years you expect to live past your retirement year. Add that to your expected Social Security annual income, plus any other income streams you know you have (such as an employer pension or interest on investments) to estimate how much more you need to start saving in order to reach your goal. For example, say you expect to retire at the age of 68 and live to be 95 years old. That is 27 years. If you think you will need $4,000/month to live on, and if you expect to earn $3,000 in monthly Social Security checks between yourself and your partner, with no other expected income stream, that leaves a gap of $1,000/month. Multiply this by 12 equals a need of $12,000/year; multiplied by 27 years = $324,000 of retirement savings needed over your retirement years.

    Also, remember to take into account that there will be the occasional extraordinary costs such as buying a new car, replacing an appliance, or paying for medical or prescription costs not covered by insurance. It’s important to be aware of your health insurance coverage options once you retire and include those monthly expenses in your retirement budget. There is an additional option of planning to continue to work past retirement age, either full-time or part-time. This can be done either in the same field or in an entirely new one.

  3. Talk to a certified fee-only financial planner about out how to invest any savings you have and need to put aside going forward to reach your financial goal by retirement. Make a plan and stick to it, but stay in periodic touch with your financial planner to evaluate your progress and stay on top of any necessary changes over time.

Meet our Soroptimist Author

Jenny Huntley is a member of Soroptimist International of Borrego Springs, while also a CPA and she has an MS in Accountacy and a BS in Business Administration from SDSU. She’s worked her entire career in the Accounting and Tax fields.

When asked why she’s passionate about women and finance, she says, “My parents both taught me the importance of being financially self-supporting. My parents were both immigrants who grew up in Europe during WWII. Neither was able to get a high-level education because of the war, but both worked hard, lived within their means, and were able to retire comfortably. 

Most schools don’t teach basic personal finance though, so I feel there is a need to try to help people in this area. This is specially important for women, who many times end up raising their families on their own, earn less than men in general, and may have to struggle to either pay for childcare, or leave the workforce temporarily to raise their children on their own.”