How Much Retirement Income Do You Need?
How much retirement income do you really need for your future plans?
Women face a unique set of challenges when planning for retirement.
Although we’ve come a long way towards gender equality, there are still ways in which men and women are not equal. In financial planning, women face a unique set of challenges due to a number of factors. When it comes to retirement, there are several ways that retirement planning for women is notably different.
In the past, financial and retirement planning were men’s responsibilities. Although more women are taking ownership of their finances, there is still a disparity between the genders, and it’s critical for women to arm themselves with proper preparation. Every retirement plan is unique, but women should take these five differences into account as they start to plan.
Men and women reaching the age of 65 today have a two and a half year life expectancy difference. Although that might not sound like a lot, it can have significant implications when it comes to saving for retirement. Longer life expectancy means that almost every woman will have sole responsibility over her finances at some point in her life. Even married women should weigh out the possibility of being widowed and losing a Social Security check as well as paying higher taxes as an individual.
Living longer not only means funding additional time in retirement, but it also means higher health care expenses. The combination of rising health care costs and medical advancements consistently driving the average lifespan up make planning for possibilities, including long-term care costs, absolutely crucial.
Even though more women have entered the workforce, they are still more likely to take time away from work to raise children than their male counterparts at some point during their career. If you’ve taken time away from the workforce to handle the job of raising your family, this can create a significant difference in your total savings.
Not only are women more likely to stay home with their children for several years, they’re also more likely to take time off to care for elderly family members. Altogether, women that quit their jobs to act as a caregiver lose an average of $324,044 in wages and benefits.
Even though women make up 46.9 percent of the total labor force, there is still a notable wage gap between the genders. In 2019, women still earn only $0.79 for every dollar men make. And, if you’ve taken time away from work to care for children or family, the problem compounds. Fewer years in the workforce, in addition to smaller paychecks, can lead to a significant gap in total earnings between women and men.
Not only does the pay gap and time away from the workforce affect your overall income, but it can also impact the Social Security and pension benefits that you’re eligible for. Women today have an average annual Social Security income of $12,587, while men receive an average of $16,590. Timing when you opt into Social Security is one of the most significant factors to maximize your benefits.
Women are Less Likely to Prioritize Retirement Preparations
Whether married, unmarried, or divorced, women’s retirement savings fall short when compared to mens’. Other priorities, such as buying a house or purchasing things for their children’s needs, tend to win out over putting money aside. Women invest more conservatively and contribute a lower percentage of their annual income to a 401(k) compared to men.
To get a better picture of how to ensure your financial future, you’ll want to speak with a financial advisor. Consider reaching out to Royal Oak Financial Group. Our Worthington and Lancaster offices work hard to make sure that every client is equipped to make informed decisions about their finances. Contact us today to schedule an appointment and start reaching your financial goals for retirement.