Women and retirement: 6 challenges to a secure future

DATE | 08/03/20
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The journey to financial security is different for women, so being aware of potential obstacles ahead of time will help you prepare for and overcome the hurdles.

A comfortable retirement is an expensive endeavor for everyone. Financial planners suggest one should shoot for an annual retirement income that’s roughly 85% of your preretirement income, depending on your continued fixed expenses. Translation? Everyone needs to save—a lot. But women should actually be saving more.

“Women are at a much higher risk of facing financial uncertainty in retirement and retiring with considerably less savings than men,” says Andrea Hartwig, Financial Planner at WEA Member Benefits. “Women face unique challenges. Generally, they spend fewer years in the workforce, earn less income, gravitate toward conservative investments, and have longer life spans than men.”

While not every woman will experience the same challenges, it is likely that most will face more than one, which compounds the problem. “Their road to retirement is more long and winding than that of their male counterparts,” explains Andrea, “making it even more critical for women to recognize key life events that can trigger a financial setback. Women need to be aware and prepare.”

Challenges facing women


The life expectancy for men in the U.S. is 76 years. For women it’s 81.1 While five years may not seem like a lot over a lifetime, it does mean the average woman will need to save more to fund the extra years compared to the average man. From a financial perspective, this is significant—and the price tag on those years will likely be higher.

Longevity brings with it a greater potential for increased health care costs. “People often believe that once they hit 65 and qualify for Medicare, their health care costs are covered, but that simply isn’t the case,” says Andrea. “Medicare is a great benefit, but it’s far from free. There will still be out-of-pocket expenses that are not insignificant.”

It is estimated that the average couple retiring at age 65 will need $285,000 to cover health care and medical costs in retirement. Women will need more than men—$150,000 vs. $135,000.2 And that doesn’t include long-term care services, which, despite what many think, are not covered by health insurance or Medicare. This is an important consideration as:

  • Seventy percent of those turning age 65 today will need some type of long-term care services in their remaining years.
  • Women make up more than 70% of nursing home residents and on average need care almost twice as long as men.
  • The annual median cost for a private room in a nursing home in Wisconsin is about $112,146, and a private room in an assisted living facility is $51,600, around the same cost as 40 hours a week of a home health aide.3

Health care continues to be one of the largest expenses in retirement. The longer you live, the greater the cost will likely be.


While strides have been made regarding equal pay, women are not always paid as much as men in the same fields and positions. According to the U.S. Census Bureau, women earn about a third less than men during their working lives, resulting in smaller contributions to Social Security, pensions, and other retirement accounts. It is a major contributing factor as to why women are 80% more likely to wind up in poverty than men when they’re age 65 or older.4

Women are also more likely to work part-time because they often fulfill other roles in the family requiring their time (like caregiving). Part-time workers may not qualify for their employers retirement plan, and again, lower income means less going into Social Security on their behalf.


The pay gap issue is amplified for women who drop out of the workforce temporarily to be stay-at-home moms or to care for sick or aging parents. With 75% of all unpaid caregivers being women, the impact is far reaching and has long-term financial implications.5

Here’s what that means for women financially.

  • Every year spent out of the workforce costs families three times the parent’s annual salary in lifetime income.6
  • Women who take time off can fall behind in rank and miss out on opportunities for career advancement and increased income.
  • Loss of access to an employer-sponsored retirement plan and a reduction in pension accumulation.
  • Loss of contributions and years of credits to Social Security benefits.

However, Andrea notes, this shouldn’t discourage women from taking time out of their careers.

“The key is to plan for it. The earlier you start saving and the more you contribute, the more time you can comfortably take off from your career,” she says.


By and large, women gravitate toward more conservative investments than men. Playing it safe is more comfortable and may be a good approach when near or in retirement, but such a strategy usually means lower earnings over the long run. “If you take this approach, you may need to invest more money to meet your goals. But if there’s a time to be more aggressive, it’s when you’re young. Because of the long timeline, you are in a better position to recover from market fluctuations,” says Andrea.

Having a better understanding of investing and the relationship between risk and reward will help you find an investment strategy that will help you reach your goals and still sleep at night. It’s a balance. And, don’t be afraid of getting some professional help. You can go to to learn about financial consultation options and set up a phone or video conference with a financial planner.

The Investor Suitability Profile Questionnaire offered by Member Benefits can help you determine the level of risk you’re comfortable with. After providing some basic information about your situation and answering six questions, you will receive an indication of your investment style along with an appropriate investment allocation.


This challenge is really more about planning for your future than it is about marital status. Because nearly every woman will have sole responsibility for her finances at some stage in her life—whether single by choice, divorce, or widowhood—it’s important for women not only to have a plan but to also have ownership in the plan.

“Women should always be involved in conversations about finances, whether that’s at the financial advisor’s office or at the dining room table at home. This is not the place to hand off control. Taking responsibility for your own financial security will prepare you for whatever turns your life may take,” encourages Andrea.


It goes without saying that any big decision should be made with care—and there may be no greater decisions to make right now than about your financial future.

“Here is where having knowledge about your long-term finances comes in handy,” says Andrea. Knowing how you (and your spouse if applicable) are saving and what kind of accounts you have—403(b,) IRA, 401(k), and/or your Wisconsin Retirement System—is significant, because each account type has different rules and restrictions, and each serves a strategic role in your retirement income stream.

Without that knowledge, people can make costly and irreversible mistakes. For instance, it’s all too common for people to dip into their retirement account early. In fact, 52% of all savers take early withdrawals—a move that can cost you dearly in three ways:

  1. Penalties for unqualified distributions typically run 10% but could be higher if the account has surrender fees.
  2. Taxes may apply to withdrawals and may push you into a higher tax bracket.
  3. Earnings on the money you withdraw will cease, and you will lose out on future growth from compound interest.

“While this may be tempting, especially in difficult times like the COVID-19 pandemic, it really should be a last resort option,” says Andrea. “Your retirement savings should be earmarked for retirement. Building an emergency fund where the money is easy to access is a better way to plan for surprise financial situations that pop up in daily life.”

It’s all connected

Generally, the closer you get to retirement, the more complex your finances become—and it’s also a time when you are financially vulnerable. You will have several big decisions to make, including when to stop working, when to take Social Security, how to pay for health care, and how to generate cash flow from your retirement assets. These decisions are interconnected and could make a difference in your living costs and lifestyle in retirement—and ultimately determine when you can retire.

Andrea advises, “You really want to have a handle on these well before retirement. If you have a solid plan and an understanding of what your plan entails, the decisions will be easy to make.”

The information in this article is provided only as a summary of complicated topics and does not constitute legal, tax, investment or other professional advice on any subject matter. Further, the information is not all-inclusive and should not be relied upon as such. All investments hold risk and there can be no guarantee that your investments will be profitable or that your goals will be achieved.
1 U.S. Census Bureau   |   2 HealthView Services (a provider of health-care cost projection software) and Fidelity Investment (2019)
3 Wisconsin Office of the Commissioner of Insurance (OCI) (2019)   |   4 2018 report from the National Institute on Retirement Security
5 American Association for Long-term Care   |   6 Center for American Progress
ARTWORK: Daisy Garrett

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