How advisers can help their female clients overcome retirement savings hurdles

Saving enough for retirement is difficult for most Americans and unfortunately, it can be even more difficult for women. Women earn less, live longer and face higher lifetime healthcare costs. By understanding these obstacles, advisers can help clients who may be lagging behind in retirement preparedness pull ahead.

Retirement Savings Shortfall
A 2019 report found that the average retirement savings shortfall for women was nearly twice that of men: $72,883 for single women versus $37,690 for single men. Further, 10% of single women have a retirement savings shortfall of at least $222,592. Another report shows that 31% of women believe that they are on target for retirement, compared to 38% of men.

A 2019 report by the Social Security Administration found that of those who receive Social Security benefits, unmarried women (including widows) rely on Social Security for 45% of their total income, compared to 32% for unmarried men and 27% for couples.

One reason for the apparent shortfall is that, on average, women earn less than men. The U.S. Bureau of Labor Statistics reported an 18.6% wage gap between women and men during second quarter 2019. It cited median weekly full-time earnings for women at $814 — 81.4% of that for men ($1,000), based on the ratio of median earnings for full-time, year-round work.

Career Breaks
In addition to potentially earning less, women generally are more apt to take breaks from work or turn down promotions at work because of family care obligations. These career breaks can easily turn into savings breaks because they are less likely to set aside money in a savings arrangement or contribute to an employer-sponsored retirement plan. Once reemployed, it is often on a part-time basis or at a lower wage, setting them back just when they are starting to save again.

Life Expectancy
The Social Security Administration states that the life expectancy for women is 86.7 years and for men is 84.3 years. Thus, women have a higher chance than men of outliving their sources of income — and having a longer lifetime of healthcare costs. As such, women may need to save more to have enough income to support themselves throughout their retirement years.

Solutions to Help Women Prepare for Retirement
While the picture isn’t bleak, it is a bit dreary. By providing your clients — especially women — with reliable, useful consumer education, you can help put them in a better position to reach their retirement savings goals. Encourage them to consider the following options:

• Saving in an IRA, if eligible (if little or no income and married, contributions can be made based on spouse’s earned income)
• Contributing to a health savings account (HSA), if eligible, to save for future healthcare expenses
• Saving in a retirement plan — at least enough to receive free money, such as an employer match
• Taking advantage of the federal saver’s credit if eligible (see Form 8880, Credit for Qualified Retirement Savings Contributions)
• Opening a small business retirement plan (SEP, SIMPLE, or Individual(k)™), if eligible
• Learning more about investing
• Seeking financial assistance from experts who are committed to their clients’ retirement security