Women Are Far Less Financially Prepared for Retirement Than Men, TransAmerica Study Finds

A TransAmerica study found that men have more than double the retirement savings of women. (iStock)

Many women are not financially prepared for retirement, according to a recent report of TransAmerica.

Men have about twice as much money saved for retirement ($118,000) as women ($57,000). Worryingly, almost a quarter (24%) of women currently have less than $10,000 saved for retirement, compared to just 14% of men.

Total household retirement savings, women vs men

Seventy-nine percent of men are confident in their ability to fully retire with a comfortable lifestyle, compared to only 64% of women. Men and women think they will need to have saved $500,000 to retire comfortably.

A third (33%) of women have no retirement strategy, which is significantly more than the 18% of men. Women are also significantly less likely than men to currently save for retirement, at 77% and 86%, respectively.

Financial preparation for retirement, women vs men

Despite the vast majority of men and women worrying that Social Security will run out before they retire, 27% of women and 17% of men plan to rely on Social Security payments as their main source of income during retirement.

Read on to learn about the challenges women face when saving for retirement, as well as how women can better prepare themselves financially for retirement. If you’re looking for ways to improve your financial situation before retirement, visit Credible to compare a variety of financial products ranging from debt consolidation loans to high-yield savings accounts.

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Women face unique challenges as they prepare for retirement

There are a number of hurdles women face when saving money for retirement, starting with the gender wage gap, according to Stacy J. Miller, a Certified Financial Planner (CFP) based in Tampa, Florida. Women generally earn less money than men, which translates into lower retirement savings.

Miller said that because “women are often the keepers of the family,” they may have to leave the workforce to care for children and aging parents. Missing work periods can lead to lower earnings over time and “fewer opportunities for pay raises and promotions.”

Most female caregivers have had to make work adjustments, such as missing workdays (36%), alternating hours (28%), reducing their hours (27%) and even resigning from their jobs (10% ), reports TransAmerica.

Work arrangements due to caregiving, men vs. women

“Also, women statistically live longer than men, so their retirement portfolios would need to be larger than men’s to last longer,” Miller said.

Without proper financial planning and adequate retirement savings, some retirees may become dependent on credit card spending to cover basic expenses. If you’re struggling to pay off high-interest credit card balances, you may be able to save money through debt consolidation. You can read more about credit card consolidation on Credible to determine if it’s the right financial strategy for you.

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How women can better prepare for retirement

If you’re one of the many women whose retirement savings are insufficient, there’s still time to save. Consider these tips from female financial advisors on how women can be better prepared financially for retirement:

Learn more about each strategy in the sections below.

Maximize your retirement contributions

Working women and self-employed caregivers should find a way to contribute the maximum amount to retirement plans, according to Kimberly Foss, a CFP in Roseville, Calif. — “particularly during senior women’s peak earning years, which often occur near retirement.”

In 2022, employees can defer up to $20,500 of their annual income into their workplace retirement plan or 401(k). The current contribution limit on all Individual Retirement Accounts (IRAs) is $6,000 per year.

Women approaching retirement age should take advantage of catch-up provisions to boost their account balances, Foss said. This allows people age 50 and older to contribute an additional $6,500 per year to their 401(k) plans and an additional $1,000 to their traditional IRAs and Roth IRAs.

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Spread your investments

In addition to maximizing their contributions, women should also consider how their retirement investments are allocated, according to Joyce Streithorst, CFP in Melville, NY

“Default investments impact growth and long-term returns,” Streithorst said. “Lifecycle or target date funds can help provide an allocation to equities and fixed income to try to align risk with your age and expected year of retirement.”

Retirement savings accounts are typically invested in bonds as well as the stock market in the form of index funds and mutual funds. Investment allocations vary between conservative, moderately conservative and moderate, depending on risk tolerance.

An investor’s retirement portfolio generally varies with market conditions. Since consumers have their own financial goals and obligations, it’s important to determine the right asset allocation strategy for your needs.

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Contact a financial adviser

TransAmerica reports that while 43% of men use a financial advisor to help them manage their savings and investments, only 34% of women do. That could be due to a lack of female counselors, said Tess Zigo, CFP in Palm Harbor, Fla.

“Because we don’t see a lot of women in finance and as financial advisors, it doesn’t seem approachable or approachable,” Zigo said. “A lot of women feel more comfortable working with someone they can relate to.”

Retirement planning can be overwhelming at times, so you might want to consider hiring a professional to guide you through the process. You can search for counseling services in your area at CPF website.

And if you’re looking for the right financial products for a successful retirement, it’s important to shop around. You can visit Credible to compare interest rates on everything from personal loans to mortgages for free without affecting your credit score.

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Do you have a financial question, but you don’t know who to contact? Email the Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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