Planning For Retirement: 5 Tips For Women At Every Age

Most of us have daydreamed about retirement at least once. Thinking about traveling, relaxing, and enjoying life is exciting. But while it is easy to imagine the happiness, it is harder to think about the practicalities. How much do you need to save? Will your savings last as long as you live?

The reality is that 74% of women do not have a financial retirement plan. There are also additional factors to consider. Longer life expectancy, the gender wage gap, caregiving responsibilities, and higher health care costs add complexity. Simply put, women need to plan and save differently from men. Here are five tips to help you prepare, no matter your age.

A 2024 Northwestern Mutual study revealed that 49% of Boomers and 40% of Gen Xers know how much money they need to retire comfortably. 

Financial expert Suze Orman recommends doing a deep dive into your finances to determine how much and how long you need to save. Examine your current living expenses, estimate future expenses like healthcare or in-home help, and adjust for at least 3% inflation each year. 

If you have a spouse, calculate savings and expenses if one of you passes away. Do not forget to consider the taxes on withdrawals from tax-deferred accounts. Suze’s Where You Stand With Your Money exercise can help you get a comprehensive picture of your finances.

Women frequently become caregivers for children or elderly parents, which often requires taking time off from work. This costs women almost $300,000 in lost earnings. It can also create a snowball effect: lower retirement contributions, savings, and Social Security benefits.

This is why it is important to maximize savings opportunities while you are working. The U.S. Department of Labor (DOL) encourages women to enroll in their company’s 401(k) or pension plan. Many employers match your contributions.

The DOL also recommends understanding your company’s vesting policy, which is how long you need to work to qualify for benefits. Be sure to review your summary plan description (SPD) to know how your benefits are calculated and what retiring early would mean.

With almost 93% of U.S. workers paying into Social Security, the program is an important source of retirement income. Your benefits are calculated based on your top 35 years of income.

Personalized benefits estimates are available on the official Social Security website. You can also adjust future income to see how it will affect your estimate. Knowing your estimated benefits can help you plan better, especially when it comes to deciding when to retire.

To increase your retirement savings, finance expert Mrs. Dow Jones advises maxing out your tax-advantaged accounts, like a traditional or Roth IRA. These accounts help you save more because they offer tax benefits. Fidelity offers user-friendly options as well as free support from financial professionals.

As with all saving, the sooner you start, the more interest you earn. Mrs. Dow Jones uses a simple example to emphasize the power of compound interest. Investing $100 a month into a Roth IRA for 40 years with a 12% return would yield $1 million. A 10-year delay would only yield $300,000, costing you $700,000 in lost savings.

Women live an average of six years longer than men, meaning retirement savings need to last longer. This also means women should think about the healthcare costs of living longer. 

Clever Girl Finance recommends contributing to a Health Savings Account (HSA) for healthcare expenses during retirement. HSAs offer tax-free contributions, tax-free growth, and tax-free withdrawals. The money also rolls over from year to year and never expires.

In addition to an HSA, set up an emergency fund. You can cover unexpected expenses without decreasing your retirement funds or paying penalties for early withdrawals.