How Women Can Win the Retirement Savings Struggle

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Saving for retirement is not an overnight project. It takes years of strategic planning to build a nest egg that can sustain you through the end of your life.

In fact, Americans believe they’ll need nearly $1.5 million to retire comfortably in 2024, according to a study from Northwestern Mutual. That’s a 53% increase from 2020, when Americans believed they’d need $951,000 to retire comfortably.

This sharp increase is concerning, but data shows women face additional challenges when building their nest eggs. Prudential’s 2024 Pulse of the American Retiree Survey found that women only have roughly one-third the amount saved as men (a median of $50K vs. $157K). The data also shows women are three times as likely to delay retirement due to caregiving duties.

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But it’s not all bad news. There are steps women can take to boost their retirement savings, helping them reach their retirement goals.

No 401(k)? One alternative to consider

Many women report not having access to an employer-sponsored retirement plan. This could be partly due to the amount of time women spend at work. According to the Department of Labor, women are more likely to work part-time jobs, which often don’t come with access to retirement savings plans. Gender roles also come into play with women being more likely to take time off work to care for family. As a result, they’re working fewer years and contributing less to retirement savings. When it comes to employer-sponsored retirement plans such as a 401(k), the Department of Labor found only 43.5% of working-age women participated in a retirement plan.

While contributing to an employer-sponsored retirement plan is helpful due to matching contributions, it’s not a requirement to build retirement savings. Opening a Roth IRA is a great alternative. These accounts offer tax-free growth and tax-free withdrawals in retirement.

With investing, an early start helps

Another crucial step in maximizing your retirement savings is investing. When it comes to investing, time is your best friend. A report from Fidelity Investments found 7 in 10 women wish they would have started investing their extra savings earlier. Investing early on gives your money more time to grow, thanks to factors like compound interest.

Plus, investing at a younger age allows you to take more risk. Historically speaking, women tend to take a more conservative approach with their investments. A report from Wells Fargo found 76% of men believe the stock market is a good place to invest, compared with just 72% of women. Some of this lag could be due to women’s knowledge and risk tolerance when making investments. According to Fidelity, 70% of women respondents said they need to know more about picking individual stocks and 65% say they’d be more likely to invest if they had clear steps to follow.

Investing can be overwhelming, but you don’t have to have a high risk tolerance to see a good rate of return. The same report from Fidelity found women outperformed men in their investments by 40 basis points or 0.4%. If you’re feeling uneasy about investing, consider meeting with a financial adviser. They can help you build a diverse investment portfolio that aligns with your financial goals.

Don’t forget about health care

Outlining your long-term care plans is another component of your retirement plan. Medical care can become extremely expensive over time, especially if you require in-home care or need to be moved to a nursing home or assisted living facility. Women also have a longer life expectancy compared with men, which can exacerbate costs. According to the CDC, the average life expectancy for men is 74.8 years old. For women, it’s 80.2 years old.

Purchasing long-term care insurance can help offset these costs, mitigating the fear of outliving retirement savings.

Make learning about finances a lifelong priority

Financial literacy is another key component to creating and preserving your wealth. Attending financial seminars, reading up on financial news and following changes in federal supplemental programs such as Social Security and Medicare can help you financially prepare for the future. Learning about various money management strategies and how to apply them to your financial situation can help you maximize your savings, providing you with a nice financial cushion in retirement.

In addition to staying educated, meeting with a financial adviser can also be a huge help. They can answer any questions you may have and suggest solutions that fit your needs.

The bottom line: There’s hope for women

Saving for retirement requires a lot of planning. It can be difficult to plan for the unknown. However, contributing to a retirement account, whether that be a 401(k), Roth IRA or both, is a great first step. Even if you’re only able to make small contributions, you’ll be surprised at how these funds grow over time.

From there, begin researching various investments you’d like to make. If you have any questions or concerns, consult with a financial expert. As you’re planning your retirement, don’t neglect your long-term health care plan. Purchasing long-term care insurance can help supplement certain medical costs, which can preserve your savings and lessen the burden on your loved ones as you age. And remember, knowledge is power. Continue your journey to financial literacy. Not only will it teach you money management skills, it will also help you feel more confident about your financial situation.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Kelsey Simasko is an associate attorney at the Simasko Law firm, where she specializes in Elder Law and Wealth Preservation. She follows in the footsteps of her late grandfather, Leonard J. Simasko, who started the firm in 1955, as well as her uncle, James M. Simasko, and father, Patrick M. Simasko — partners of the Simasko Law firm.