At Springwater, we\u2019re fortunate to count many \u201cindependent\u201d women among our clients.\u00a0 For us, \u201cindependent\u201d simply means that they rely on their own financial resources to support themselves.\u00a0 Some are widowed, some divorced, and some never married. \u00a0They vary in age from their 50s to their 80s. \u00a0Over the years, we\u2019ve discovered how retirement planning for women is different, and incredibly important. Here\u2019s why.<\/p>\n
We all know that women live longer than men. If you’re a woman, the World Health Organization<\/a><\/strong> reports that you will live, on average, six to eight years longer than men.\u00a0 Newborn girls are more likely to reach their first birthday than newborn boys.\u00a0 The trend continues throughout life, as women outlive men at every age.\u00a0 In the United States women live, on average, to age 81.\u00a0 Men, in contrast, live to an average age of 76.\u00a0 If you\u2019ve ever visited a retirement community, you quickly see that women outnumber men.\u00a0 Average life expectancy in the US has actually declined in the past few years. \u00a0But that is a topic for another day.\u00a0 The fact that women live longer than men means that retirement planning for women<\/a><\/strong> is particularly important.<\/p>\n Despite the significant gains that women have made in the workforce, they continue to earn less than men.\u00a0 The Institute for Women\u2019s Policy Research<\/a><\/strong> reports that women earn less than half of what men earn.\u00a0 There are a variety of reasons for this disparity.\u00a0 Women with children are typically the parent who takes primarily responsibility for their care.\u00a0 While women are increasingly continuing to work while simultaneously raising a family, it\u2019s still common for a woman to step out of the workforce to raise their kids<\/a><\/strong>.\u00a0 By stepping out, women put their careers on hold, and as a result their earnings levels stagnate.\u00a0 Men usually remain in the workforce during their parenting years, and their earnings continue to increase over time.\u00a0 Women are also more likely than men to step out of the work force to care for elderly parents.\u00a0 They usually do this later in their careers, just when they could be maximizing their earnings.<\/p>\n Another factor that explains the gender wage gap is that, historically, women were not as well-educated as men and, as a consequence, were not able to secure the high-paying jobs available to better-educated men. \u00a0This is changing as women are increasingly earning more undergraduate and graduate degrees than men.\u00a0 There is also, put very simply, gender discrimination in our society which, while not as pronounced as it was in the past, continues to hinder women as they seek equal pay for equal work.\u00a0 Because women earn less, they save less and because they save less, retirement planning is more challenging.<\/p>\n <\/p>\n <\/p>\n Women receive lower Social Security benefits than men.\u00a0 The Social Security Administration<\/a><\/strong> reports that, in 2017, the average Social Security income received by women 65 years and older was $14,353, compared to $18,041 for men. \u00a0Why?\u00a0 As we\u2019ve discussed here, women typically spend fewer years in the workforce than men, and they generally earn less.\u00a0 As a result, they pay less into Social Security and earn fewer benefits credits.\u00a0 Because Social Security<\/a><\/strong> is a progressive system, women actually receive a higher percentage benefit than men who have higher earnings.\u00a0 But this is of little comfort.\u00a0 The Administration reports that, in 2017, Social Security benefits comprised 45% of the total income received by unmarried (including widowed) women, and 48% of these women relied on Social Security for at least 90% of their income.\u00a0 So, while some women are highly dependent on Social Security, the benefits they receive are relatively meager.\u00a0 This is yet another reason why retirement planning for women is so important.<\/p>\n Because women work fewer years and earn less than men, it\u2019s not surprising that they\u2019re unable to save as much for retirement.\u00a0 They\u2019re less likely than men to qualify to participate in their employer\u2019s retirement plans.\u00a0 If they are eligible, they\u2019re less able than men to save in those plans, because they earn less.\u00a0 Defined benefit pension plans, which pay out a stream of monthly income for life, are far less common in the United States than they were during the period from 1940 to 1980.\u00a0 These retirement plans provided far greater financial security for workers than today\u2019s more common defined contribution (e.g. 401(k) and 403(b)) plans.\u00a0 The Transamerica Center for Retirement Studies recently reported<\/a> <\/strong>that women have saved an average of only $23,000 for retirement.\u00a0 The report also indicates that women believe that they\u2019ll need $500,000 to be financially secure in retirement.\u00a0 So, the gap between what women have and what they think they\u2019ll need is enormous.<\/p>\n The conventional thinking in the investment industry is that women are more conservative investors than men.\u00a0 There are various explanations for this.\u00a0 Women are often nurturers and protectors by nature, and in this role they\u2019re attuned to avoiding risk.\u00a0 Women are also generally not as knowledgeable about investing.\u00a0 So, they may avoid risky investments they don\u2019t understand.\u00a0 As noted previously, women earn less and save less.\u00a0 So, they\u2019re often more protective of what they have than men.\u00a0 Culturally, women simply appear to be more risk-averse than men, and it may be that this difference can at least in part be traced back to human evolution.<\/p>\n At Springwater, we\u2019re not convinced that women are inherently more conservative investors than men.\u00a0 All of our clients complete an investor risk profile which gives us some insights into the client\u2019s willingness to accept the inherent riskiness of investing in the stock market.\u00a0 We find that women are generally more conservative than men.\u00a0 Having said that, we also have many female clients who are very comfortable with investment-related risk.\u00a0 What really matters is determining how much investment risk you must take, in order to reach your financial goals and live comfortably in retirement.\u00a0 The challenge is that women often must take relatively more risk, because they\u2019ve saved less, they\u2019ll need more, and they\u2019ll live longer, than men.<\/p>\n Everyone needs to save for retirement, and most American are woefully unprepared for it.\u00a0 Retirement planning for women is even more important, because of their unique circumstances.<\/p>\n","protected":false},"excerpt":{"rendered":" At Springwater, we\u2019re fortunate to count many \u201cindependent\u201d women among our clients.\u00a0 For us, \u201cindependent\u201d simply means that they rely on their own financial resources to support themselves.\u00a0 Some are widowed, some divorced, and some never married. \u00a0They vary in age from their 50s to their 80s. \u00a0Over the years, we\u2019ve discovered how retirement planning […]<\/p>\n","protected":false},"author":2,"featured_media":3280,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"","_et_gb_content_width":"","_mi_skip_tracking":false,"footnotes":""},"categories":[3,6],"tags":[66,118],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/posts\/3270"}],"collection":[{"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/comments?post=3270"}],"version-history":[{"count":0,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/posts\/3270\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/media\/3280"}],"wp:attachment":[{"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/media?parent=3270"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/categories?post=3270"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/tags?post=3270"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Women Earn Less<\/h2>\n
Want to learn more about retirement planning? Connect with our team of specialists today to learn how we can help you build a comprehensive plan for your financial future.<\/a><\/strong><\/span><\/h2>\n
<\/h2>\n
Women Receive Lower Social Security Benefits<\/h2>\n
Women Save Less<\/h2>\n
Women are More Conservative Investors<\/h2>\n