Why Is It Important for Women to Plan for Retirement?

Retirement planning is one of the most crucial aspects of financial management, yet many people overlook it until it's almost too late. Whether you're in your 30s, 40s, or nearing retirement, having a clear and well-thought-out retirement plan can make the difference between a comfortable future and financial struggle. This is particularly true for women, who often face unique financial challenges that can make retirement planning even more complex.

Longer Life Expectancy Means More Years to Fund

One of the primary reasons why retirement planning is so critical—especially for women—is the fact that women tend to live longer than men. According to data from the Centers for Disease Control and Prevention (CDC), the average life expectancy for women in the U.S. is several years longer than men. This means that women need to plan for a retirement that could span three decades or more.

When you're working on your retirement plan, it's not just about saving enough to cover 10-15 years of living expenses; you need to account for the possibility that you could live into your 90s or even beyond. If you retire at 65 and live to be 90, that's 25 years of retirement, which can be a significant financial burden if you're not adequately prepared.

Planning and investing wisely helps to preserve enough funds to sustain your lifestyle, cover healthcare costs, and enjoy your retirement years without worrying about running out of money.

The Impact of Career Interruptions on Retirement Savings

Another important consideration in retirement planning for women is the impact of career interruptions. Women are more likely to take time off work for reasons such as maternity leave, caring for aging parents, or managing household responsibilities. While these breaks from the workforce are often necessary and fulfilling, they can also disrupt long-term earning potential and retirement savings.

For example, even a few years away from the workforce can result in missed opportunities for pension contributions, salary increases, and retirement savings accumulation. Compounding this issue is the persistent gender pay gap, which, on average, means women earn less than men for the same work. This wage disparity, combined with career interruptions, can leave many women with less in retirement savings compared to their male counterparts.

To mitigate these challenges, it’s important to make retirement savings a priority early on. Maximizing contributions to retirement accounts like 401(k)s or IRAs—particularly during years of full employment—can help bridge the savings gap. Working with the Wilmarth Private Wealth Management of Raymond James team to create a savings plan that accounts for these interruptions can help you stay on track and gain confidence in your retirement future.

Women Tend to Earn Less, But Plan More

The gender pay gap isn’t just a statistic—it's a reality that many women face throughout their careers. According to research, women earn about 82 cents for every dollar earned by men, a disparity that can accumulate over decades of work. This pay gap, along with periods of lower-paying employment (often due to career choices or flexibility needs), means that women are less likely to have enough saved for retirement.

Although women may earn less, they tend to be more proactive about saving and planning for retirement when they are aware of the need. Women are more likely to seek out advice from financial professionals and take control of their savings earlier, but that doesn’t mean the task is easy. It requires strategic thinking, discipline, and the right tools to ensure that women are putting away enough to retire comfortably.

To overcome this challenge, women need to focus on maximizing their retirement contributions, especially in their prime earning years, and consider additional strategies like catch-up contributions once they reach age 50. The earlier you begin planning, the more time your money has to grow.

Unpredictable Life Events: Divorce, Widowhood, and More

Life is unpredictable, and sometimes unforeseen events—such as divorce or the death of a spouse—can drastically change your financial outlook. For many women, divorce can have a significant impact on their retirement plans, and it often leads to financial setbacks, especially when it comes to dividing retirement assets.

Similarly, widowhood could create financial challenges for women, particularly if their spouse managed the household finances. Sudden changes in household income, compounded by the emotional toll of losing a loved one, managing the children, etc. can leave women in difficult financial positions.

That's why it’s important to establish a good relationship with a financial advisor at Wilmarth Private Wealth Management of Raymond James to collaborate and build a plan for these potential life events. Having a solid retirement plan in place means that if life takes an unexpected turn, you're financially prepared to handle it. Divorce, widowhood, or other life transitions should not derail your ability to retire comfortably.

Healthcare Costs: A Growing Concern in Retirement

Healthcare costs are often one of the largest expenses in retirement. For women, this can be an even bigger issue due to longer life expectancies and the likelihood of needing more extensive healthcare in later years. The cost of long-term care, prescription medications, and medical procedures can quickly deplete savings, especially if there’s no proactive plan to cover these costs.

Medicare may help cover some healthcare expenses, but it doesn’t pay for everything. Long-term care insurance, health savings accounts (HSAs), and other strategies are important tools to consider when planning for healthcare costs in retirement. Medicare does not pay for help with the 6 activities of daily living (ADL's): Bathing, dressing, eating, transferring, toileting and continence.

Ensuring you have a financial cushion to address medical / care costs in your later years is just as crucial as saving for day-to-day living expenses. Without a clear plan, healthcare costs can easily derail even the best retirement strategies.

The Importance of Early Retirement Planning

While retirement may seem far off, the earlier you start planning, the better. Compound interest is one of the most powerful tools for building wealth over time. The earlier you begin saving, the more time your money has to grow. Even small contributions made early on can have a significant impact on your retirement funds in the long run.

Waiting to save until later in life can create a financial burden. In fact, many women delay retirement planning, often due to competing priorities such as family or career. But starting early allows you to take advantage of tax-deferred growth in retirement accounts and can give you the flexibility to make strategic adjustments to your plan over time.

If you’re not sure where to begin, consider speaking with a financial advisor at Wilmarth Private Wealth Management of Raymond James who can help you create a retirement strategy that works for your specific needs. Setting clear retirement goals—whether it’s for travel, a second career, or simply enjoying time with family—will keep you focused on your end goal and make it easier to stay on track.

Social Security and Pension Planning

Many women depend on Social Security and pensions as part of their retirement income. However, there are important things to consider when relying on these government and employer-backed benefits. For example, Social Security benefits are based on your highest-earning years, so women who take time off work may receive lower Social Security payouts.

Understanding the timing of when to begin drawing Social Security can also make a difference in your lifetime benefits. Claiming Social Security early may result in a smaller monthly benefit, while delaying benefits until full retirement age—or even later—can increase the amount you receive.

In addition to Social Security, some women may be entitled to a pension through their employer. However, pensions are becoming less common, and many employers are shifting to 401(k) or similar defined-contribution plans. Understanding your employer-sponsored retirement plan and knowing how to make the most of it is a key element of planning for retirement.

How do I create a retirement income?

Retirement isn’t just about accumulating assets—it's about ensuring those assets work for you throughout your retirement years. Creating a comprehensive retirement income strategy is crucial. This involves understanding how to manage your investments and plan on strategic withdrawals with the best tax strategy during retirement to produce a more reliable income stream.

Your income strategy might include withdrawals from retirement accounts, pension income, annuities, and part-time work. Understanding how and when to tap into these resources is critical for maintaining financial security throughout retirement.

What are the risks of not planning for retirement?

Not planning for retirement can lead to financial stress in your later years. Without proper planning, you may not have enough saved to maintain your desired lifestyle or cover unexpected expenses like medical bills. Furthermore, without a structured savings and investment strategy, you may find yourself relying on Social Security alone, which often isn't enough to meet all your financial needs. This type of circumstance often leads to managing chaos, which never leads to good decision making. We would rather manage a plan or people than having to make decisions based on incomplete information due to not having enough time or resources.

What happens if I don’t have enough saved for retirement?

If you don’t have enough saved for retirement, you may need to adjust your expectations for your retirement lifestyle or continue working longer than planned. Many people in this situation rely on Social

Security benefits, but this may not be enough to live comfortably. It's important to revisit your retirement plan regularly and take action early if you find you are not on track to meet your goals.

Why is it important to plan for retirement as a woman entrepreneur?

As a woman entrepreneur, retirement planning is especially important because you're likely to have more control over your business and personal finances. However, this means you may also face greater responsibility in ensuring that you set aside enough for your future. A comprehensive retirement plan should account for both the uncertainty of business income and your personal retirement needs, allowing you to gain confidence for a stable financial future for both your business and you.

What are the benefits of working with a financial advisor to plan for retirement?

A financial advisor at Wilmarth Private Wealth Management of Raymond James can help you create a retirement plan that is tailored to your specific goals, financial situation, and risk tolerance. They work closely with your tax professional or CPA to provide solid guidance on tax-efficient retirement savings strategies, investment management, and navigating the complexities of retirement income. Working with our financial advisors empowers you to make informed decisions and stay focused on meeting your retirement goals.

Create a financial plan to help you gain confidence in your financial future

Planning for retirement is a critical step in ensuring that you live your later years comfortably. For women, it is particularly important due to longer life expectancy, career interruptions, and the possibility of life changes like divorce or widowhood. While the path to retirement may seem daunting, starting early and working with our team of financial advisors can help you develop a customized plan that works for you.

At Wilmarth Private Wealth Management of Raymond James, we specialize in helping engineers, entrepreneurs and women investors navigate the complexities of retirement planning. Whether you’re just starting your career or nearing retirement age, we are here to help guide you every step of the way.

Creating a plan now, allows you to build confidence and take more control of your financial destiny.

If you're ready to begin your retirement planning journey, contact us today to schedule a no obligation meeting to see if we fit your needs. We’re here to empower you with the tools and resources you need to build the retirement you’ve always dreamed of. Contact Us

*Raymond James and its advisors do not offer tax or legal services. You should discuss any tax or legal matter with the appropriate professional. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Wilmarth Private Wealth Management and not necessarily those of Raymond James. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.