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.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
Related Content
- Tips to Help Single Women Struggling to Save for Retirement
- What Every Woman Needs to Know Before Retiring
- Six Ways Women Can Overcome Any Financial Obstacles Holding Them Back
- How to Choose Your Power of Attorney When You’re Remarried
- Long-Term Care Insurance: To Buy or Not to Buy?
-
The Most Tax-Friendly State for Retirement in 2025: Here It IsRetirement Tax How do you retire ‘tax-free’? This state doesn’t tax retirement income, has a low median property tax bill, and even offers savings on gas. Are you ready for a move?
-
Plan for Higher Health Care Costs in 2026: Projected Medicare Part B and Part D PremiumsIn 2026, Medicare participants will pay more for their health care. Part B costs are expected to rise more than 10%. Here's what you can do.
-
Avoid Medicare's 'Shadow Tax' With This Financial Expert's IRMAA-Busting TipsYou're cruising along in retirement, and then bam: Your Medicare premiums soar because your income crossed the limit. Take a breath. There could be a solution.
-
Grilling Season and ETFs: There's More Than One Way to Cook Up a PortfolioExchange-traded funds come in a multitude of 'flavors' these days, from passive to active to factor-based. Their flexibility is what makes them so delicious.
-
You Don't Want It, But You Should Plan for It Anyway: An Expert Guide to Long-Term CarePlanning for long-term care is crucial to protect your independence, family and financial stability against unexpected health events and rising care costs not covered by standard insurance.
-
Five Questions to Help Ensure a Happy, Secure RetirementYou need to drill down to what you really want out of retirement. Then you can get down to the business of crafting a financial plan to make it happen.
-
I'm a Financial Adviser: This Is How You Can Save for Big Goals Even if You Feel Like You're Barely Getting ByLearning good financial habits — building an emergency fund, paying down debt, saving consistently — gives you flexibility, options and a path to security.
-
How to Buy an Annuity Online (Without Regret)You should never be rushed into buying an annuity. But now that they can be sold quickly and easily online, you need to be more alert than ever to pushy salesmanship. Here are four signs you're working online with a professional.
-
How Much Income Will an Indexed Annuity Get You? An Annuities Expert Lays Out the NumbersGuaranteed lifetime income sounds great, but how much will it be? Several factors determine your future payout on indexed annuities with an income rider.
-
Financial Fact vs Fiction: Why Inflation Is Lower, But Prices Are NotDo you think bonds protect you from stock losses? Are you confident your assets will go to your intended heirs if all you have is a will? Think again — and read on for other myths that could be leading you astray.
