4 Financial Challenges Women Face in Retirement

Retirement should be a relaxing time, but women face common financial challenges that can make the transition difficult.


Women face common financial challenges in retirement, but preparing ahead of time can help you navigate any difficulties and enjoy the fruits of your labor.

Learn the Pitfalls That Can Make this Transition Difficult

Retirement should be a time to relax and enjoy the fruits of your labor after years of hard work. Unfortunately for many women, retirement can come with a set of unique financial challenges that can make the transition difficult. From lower lifetime earnings, longer life expectancies, and caregiving responsibilities, to divorce, widowhood, and lack of financial literacy, there’s no shortage of pitfalls that can turn your golden years into a financial disaster. In this article, we’ll explore four of the financial challenges women face in retirement and steps you can take to help overcome them.

1.     Lower Wages and Earnings

One of the biggest challenges facing women in retirement is lower lifetime earnings resulting from the gender pay gap. According to the Pew Research Center, women on average earn 82 cents for every dollar earned by men. This pay disparity causes both lower Social Security benefits and lower overall retirement savings.

To overcome this challenge, women can take steps to negotiate higher salaries throughout their careers, invest in their education, and improve their skills to increase earning potential. Women can also make a point to seek out employers who offer pay equity. Beyond that, consider working with a financial planner who is knowledgeable about your unique earnings profile and can help you create a retirement plan that accounts for your needs.

SEE ALSO: Why Women’s Wealth Matters


2.     Longer Life Expectancy

Coupled with lower wages, women also tend to live longer than men. According to the Social Security Administration, a 65-year-old woman can expect to live until age 86.8 compared to 84.2 for a 65-year-old man. This means that, despite their lower lifetime earnings, women need to save more than men since their retirements often last longer. Higher healthcare costs can serve to exacerbate this issue. For instance, Fidelity estimates that the average woman enrolled in traditional Medicare will need $165,000 saved on an after-tax basis for all healthcare costs in retirement. That’s compared with $150,000 for men.

To help address this discrepancy, women (whether single or married) can consider Social Security strategies that allow them to achieve the maximum benefit amount. Another option to consider: saving as much as possible through tax-advantaged accounts.

Health Savings Accounts, for instance, can be a great way to save for the high cost of healthcare with contributions that are tax-deductible in the current year. HSAs can only be used if you participate in a high-deductible health plan, so they may not make sense for everyone. If you can afford to contribute to your HSA and pay for your healthcare expenses with your current income, then your HSA funds can be left to grow until retirement. At age 65, you can use your account to pay for any type of expense, but qualified medical expenses will be covered tax-free. This strategy can be an effective way for women to save for the high costs of healthcare in retirement.

3.     Caregiving Responsibilities

Another major obstacle facing women in retirement is caregiving responsibilities. According to the CDC, women make up two-thirds of all caregivers in the United States. Not only do they leave the workforce to care for children, grandchildren, and aging parents, but women often times become the caregivers for their aging spouses as well. This can impact both the ability to save for retirement as well as the ability to enjoy retirement once you’re no longer working.

What’s more, women themselves require long-term care for an average of 3.7 years, but often don’t have a support system to care for them when they get sick. This can exacerbate an already tenuous financial situation.

This retirement challenge can be mitigated through several proactive steps. Women in retirement can seek out resources to help with managing caregiving responsibilities, including hiring a home health aide or using respite care services. Earlier in their careers, women can negotiate flexible work arrangements and paid maternity leave to allow for a better balance between work and caregiving responsibilities. You may also consider long-term care insurance to make sure you are properly protected in the event that you need care but don’t have a support system to rely on. Working with a financial professional can be a great first step in assessing your long-term care needs.

SEE ALSO: Financial Planning Tips for Growing Families


4.     Divorce and Widowhood

Divorce and widowhood can have a significant impact on a woman’s retirement finances.

When a woman gets divorced, she may face a reduced income and will likely have to split her assets and savings, resulting in a diminished retirement fund. Additionally, the expenses for living alone may increase, further straining her financial resources.

Similarly, the death of a spouse can profoundly affect a widow’s financial situation, as she will likely lose a significant portion of household income. In many cases, divorce or widowhood may be the first time a woman is fully in charge of her finances, which can be a scary new role to take on later in life. It is crucial that women going through divorce or widowhood surround themselves with a strong support system, including friends, family, a reputable attorney, and a trusted financial professional. Assessing your finances and creating a budget for your new lifestyle can be effective first steps in beginning the next chapter of your life.  

In the case of widowhood, spouses can plan ahead for this scenario by being intentional with how they claim Social Security and other pension benefits. You may consider delaying the larger of the two Social Security benefits until age 70 to maximize the Survivor Benefit. If you or your spouse has a pension plan, consider selecting the joint and survivor benefit option so that the surviving spouse has a source of recurring income in the event of widowhood.

Partner with a Professional to Navigate Financial Challenges

Navigating retirement can be confusing even in the best of circumstances. For women, these unique obstacles can make it even more challenging. At Aviance Capital Partners, we believe our personalized wealth planning process can help you make the most of your retirement planning and avoid these common pitfalls. Schedule an introductory phone call or reach out to us at wealthrelations@aviancepartners.com to get started today.

Aviance Capital Partners, LLC (“ACP”) is an SEC registered investment adviser located in Naples, Florida. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that ACP has attained a certain level of skill, training, or ability. While information presented is believed to be factual and up-to-date, ACP does not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Not all services will be appropriate or necessary for all clients, and the potential value and benefit of the ACP’s services will vary based upon the client’s individual investment, financial, and tax circumstances. The effectiveness and potential success of a financial plan depends on a variety of factors, including but not limited to the manner and timing of implementation, coordination with the client and the client’s other engaged professionals, and market conditions. The tax and estate planning information provided is general in nature, which should not be construed as specific financial planning or tax advice tailored to an individual reader. ACP suggests that readers consult a financial professional, attorney or tax advisory professional about their specific financial, legal or tax situation. Customized financial planning indicates that financial planning will be informed by the material financial and investment circumstances of the client, as communicated by the client to the adviser, but may not consider literally all aspects of a client’s financial affairs. Past investment performance does not guarantee future results. All investment strategies have the potential for profit or loss, and different investments and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific investment or investment strategy, including those undertaken or recommended by ACP, will be profitable or equal any historical performance level. Additional information about ACP, including its Form ADV Part 2A describing its services, fees, and applicable conflicts of interest and its Form CRS is available upon request and at https://adviserinfo.sec.gov/firm/summary/146597.

For current ACP clients, please advise us promptly in writing, if there are ever any changes in your financial situation or investment objectives, if you wish to impose any reasonable restrictions to our management of your account, or if you have not been receiving at least quarterly account statements from your account custodian. ​

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