by David M. Kendrick, CPA, MST

It’s no secret that everyone should be saving for the future and have a clear picture of what it’s going to take to achieve their desired lifestyle in retirement.  The financial planning industry is devoted to this purpose.  A wealth of recent studies indicate the need for financial planning is more urgent than ever for women.  Researchers suggest women should start investing sooner and need to save more than men.  For starters, women tend to live longer than men with an average life expectancy of 80.8 years compared to that of men at 75.7 years.  As outlined by the US Department of Labor there are several factors, in addition to longevity, that indicate why women need to be proactive in their retirement planning:

  • Women are more likely to work in part-time jobs that don't qualify for a retirement plan. Working women are more likely than men to interrupt their careers to take care of family members.
  • Women tend to work fewer years and thus, contribute less toward their retirement.
  • Of the 62 million wage and salaried women (age 21 to 64) working in the United States, just 45 percent participated in a retirement plan. 
  • On average, a female retiring at age 65 can expect to live another 19 years;  3 years longer than a man retiring at the same age. 
  • Women invest more conservatively than men (indicating their investments earn smaller returns.)

A 2012/2013 study by Prudential, “Financial Experience & Behaviors Among Women,” found that:
  • Even though women were hit the hardest by the economic downturn they are more optimistic regarding the country’s short-term economic prospects over the next year. 
  • Women generally tend to be risk adverse – they view themselves as “savers” rather than “investors” which is opposite of how men see themselves.  
  • Women are increasingly becoming the breadwinners – the majority of women surveyed are the primary breadwinners of their family with almost 25% having higher incomes than their spouses, yet only 23% of these women feel they are well prepared to make financial decisions, contrasted with 45% of their male counterparts.  Only 27%  of “high earning” women maintained separate financial accounts apart from their spouse.
  • Women’s financial priorities differ – research found that women are more concerned than men about meeting immediate household expenses, the levels of household debt, becoming a burden on loved ones, and passing wealth on to their heirs.
  • Women’s confidence gap has widened – the women surveyed were less confident that they will be able to meet their financial goals and feel they are  less prepared to make wise financial decisions.

Given the ever increasing complexity of the world in which we live, we all face significant challenges saving for retirement; no one is immune from economic fluctuations or exempt from life changing events.  We all bear responsibility to our significant others to help one another plan for and achieve an equally successful, worry-free and comfortable retirement.  If your plan does not address the realities cited above, teaming with an experienced investment and tax advisory firm can increase the likelihood of leveling the field for both spouses when planning a successful retirement.