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Women fail to save enough for retirement. Here's how to fix that

  • Women typically earn less than men and take more time out of the work force, which in turn reduces their total earnings.
  • That triple whammy often reduces their retirement savings, which can be harmful because they tend to live longer than men.
  • By saving more, being more strategic about their earnings and seeking the right advice, women can improve their financial outlook.
Scene for the show The Golden Girls.
ABC | Getty Images
Scene for the show The Golden Girls.

When it comes to saving for retirement, most women aren't giving themselves a passing grade.

Only 12 percent of working women are "very confident" that they will be able to retire comfortably, according to new research from the Transamerica Center for Retirement Studies. Another 46 percent of women are "not too confident" or "not at all confident" about their retirement, according to the survey.

That insecurity highlights the unique challenges women face when it comes to saving for their later years.

A typical woman makes 84 cents to the dollar that a male worker earns, according to the Economic Policy Institute.

"The gender pay gap is alive and well," said Catherine Collinson, CEO and president of the Transamerica Institute and Transamerica Center for Retirement Studies. "Lower pay means lower available income to save."

"Take that 15 or 20 minutes to crunch the numbers and estimate how much you will need to save [for retirement]. The number that comes back may be very scary, however it's impossible to chart a course or a road map if you don't have a destination in mind." -Catherine Collinson, CEO and president of the Transamerica Institute and Transamerica Center for Retirement Studies

Women are also more likely to take time out from the work force to care for their children or aging parents. That can make it difficult to recoup lost earnings, reducing their lifetime earnings as well as their Social Security benefits.

"There's actually a triple whammy of taking time out of the work force," Collinson said.

But there are proactive ways women can anticipate these challenges, and boost their retirement prospects as a result.

1) Be realistic about Social Security benefits

Women who are approaching retirement or who are already retired are increasingly leaning on Social Security for their income, according to a recent survey from Nationwide Retirement Institute. Women on average expect Social Security to pay 58 percent of their expenses in retirement, the survey found, while 18 percent expect it will pay all of their overhead.

"This focus on Social Security is a really big problem," said Tina Ambrozy, president of sales and distribution at Nationwide. "There's a really big disconnect between what Social Security is able to cover and what it will cover."

About 74 percent of women collect benefits early, which results in lower lifetime income.

One of the ways women can become more realistic about what their benefits will cover and how they can maximize them is by consulting a professional for advice, Ambrozy said.

Many women make the mistake of going to the Social Security Administration's office and expecting to receive the best advice for them. The best course of action can vary, particularly depending on whether you are single, married, divorced or widowed.

"They don't know your personal situation," Ambrozy said. "It's a very complicated thing that needs to be addressed."

2) Don't underestimate how much you will need

Another mistake women typically make is thinking their health will hold out longer than it actually does, according to Ambrozy.

And the high costs of health care in retirement can cramp your lifestyle. Twenty-six percent of respondents to Nationwide's survey said that health care expenses have prevented them from having the retirement lifestyle they desired.

"There's actually a triple whammy of taking time out of the work force." -Catherine Collinson, CEO and president of the Transamerica Institute and Transamerica Center for Retirement Studies

Because women statistically live longer than men, they need to save even more for their later years, according to Collinson. For many, that means increasing how much they are putting away now.

"Take that 15 or 20 minutes to crunch the numbers and estimate how much you will need to save," Collinson said. "The number that comes back may be very scary, however it's impossible to chart a course or a road map if you don't have a destination in mind."

3) Be strategic about your earning power

Because many women take breaks from their career or plan on working past 65, it is imperative for them to keep their skills fresh.

While not working full time, women can still continue to develop their skills by working on a contract basis through the gig economy, Collinson suggested.

And women who are in the work force should make sure they take advantage of benefits that enable them to continue to hone their skills. That means taking advantage of classes to expand their professional abilities, even if they're not pursuing a degree, Collinson said.

When negotiating a new position, women should be sure to negotiate their pay. But they should also look at other ways to add value.

"It's not just about salary," said financial advisor Heather Ettinger, founder of Luma Wealth Advisors in Cleveland. "It's about other perks that may add up over time."

Ettinger advised one female executive who was looking at a job to include the conferences she wanted to attend in the agreement. The cost of attending those events added up to an additional $10,000 to $20,000 in value for the executive. And the visibility in the industry that they created for her meant that she had multiple job offers when that job eventually came to an end.

"It's knowing what's negotiable, not to be adversarial, just to get what you're worth," Ettinger said.

4) Work with a professional who sees the big picture

Because women are pulled in so many directions for their time, they should seek financial advisors who can help evaluate all of the different aspects of their lives, Ettinger said.

"Find somebody who is like you who is happy with their advisor relationship and ask them who they are working with," Ettinger said.