Women spend a significant portion of their lives putting their families first, tending to the needs of husbands, children and aging parents often before themselves. The problem is that as they approach retirement age, many women find themselves without ample savings to carry them through their golden years.
According to the U.S. Census Bureau, working women earn 83.7 cents for every dollar men earn, a difference of $10,000 per year. This inequality persists even though women make up almost half of the workforce, receive more higher-education degrees than men and are often a family’s sole source of income. Women also tend to live longer than men and are at greater risk of exhausting their savings during their lifetimes, which is one reason why almost half of all unmarried and widowed women age 65 and older depend on Social Security benefits to provide 90 percent or more of their total income. Yet, the estimated average Social Security benefit for a retired worker in 2024 is $1,901 a month – far from enough to fund a comfortable lifestyle and sustain one’s financial stability over the long term.
Following are four tips to help women balance their roles as family breadwinners and caregivers while providing much-needed TLC to their financial needs.
Make Retirement Planning a Priority When You Are Young
Retirement may be the furthest thing from your mind when you graduate college, secure your first job or start a family. However, time moves quickly, and the sooner you begin saving for your future, the more secure your future will be. Waiting until your children are grown and out of the house is too late. Do you want to spend your 50s and 60s playing catch up and saving for the future, or do you want to enjoy the fruits of your many years of labor? Make retirement savings a line item on your household budget as early as possible and commit to prioritizing it.
Recognize the Reality of Rising Expenses in Retirement
Unfortunately, as we age, we require more medical attention and assistance with daily activities. The costs for all of these forms of care, including medications, in-home nursing services and post-surgery rebab stays, are almost certain to rise in the future. Be realistic about how much you will need to survive and thrive in your older years. While Social Security may help you supplement the costs of your required care in the future, you should not rely on it as your sole source of income in retirement.
Flex your Financial Independence with a Retirement Savings Plan Just for You
Many married couples plan for retirement together, drafting wills and estate plans while contributing to their workplace 401(k) retirement accounts. However, not all women work outside of the home, and even when they do, they may not have access to employer-sponsored retirement benefit plans. Moreover, with women outliving men, you will likely have the sole responsibility of making all of your financial decisions for yourself in the future. Why not get a head start on your financial education while you’re young?
Consider what you can do to establish a retirement plan for yourself, separate from your spouse, to provide you with financial independence and long-term care over your lifetime.
If you are married and not working, the tax laws allow you to establish and fund a spousal individual retirement account (IRA) each year, provided your spouse is employed, and you file taxes jointly. For 2024, you and your spouse may individually contribute up to $8,000 each to an IRA or $9,000 per account if you are older than 50, as long as the total contribution amount does not exceed your joint taxable income.
If both you and your spouse work, you may also qualify to make annual IRA contributions. However, depending on your taxable income and access to a workplace retirement plan, you may not receive the full benefit of a tax deduction in the year of your contribution.
Understand Social Security Benefits
Social Security benefits can provide a financial cushion to an already adequate retirement savings. However, it does require families to engage in planning before they reach the age of 62, which is the earliest they may begin taking Social Security benefits. Generally, the longer you wait to start taking withdrawals, the higher your annual payout. Additionally, because Social Security offers spousal and survivor benefits, even to a divorced spouse, couples should develop and follow a well-thought-out strategy for maximizing the value of their potential Social Security benefits.
There are few guarantees in life. However, the more you prepare for an unknown future, the more likely you will survive and thrive. Women, in particular, should recognize that shifting their focus away from their roles as caregivers to their own personal needs is not only selfless but also an invaluable gift to your family.
About the Author: Olga Ismail is the head of Retirement Plan Consulting and a financial advisor with Provenance Wealth Advisors (PWA), an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors + CPAs and a registered representative with PWA Securities, LLC (PWAS). She can be reached at the firm’s Fort Lauderdale, Fla., office at (954) 712-8888 or info@provwealth.com.
Provenance Wealth Advisors (PWA), 200 E. Las Olas Blvd., 19th Floor, Ft. Lauderdale, FL 33301 (954) 712-8888.
Olga Ismail is a registered representative of and offers securities through PWA Securities, LLC, Member FINRA/SIPC.
This material is being provided for information purposes only and is not a complete description or a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
Any opinions are those of the advisors of PWA and not necessarily those of PWA Securities, LLC. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of PWAS, we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Prior to making any investment decision, please consult with your financial advisor about your individual situation.
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Updated February 5, 2024