How Gender Impacts Retirement Finances

elderly woman with financial advisor
Rolf Sjogren | The Image Bank | Getty Images
elderly woman with financial advisor

Maybe men are from Mars and women from Venus when it comes to dating. However, in retirement it’s too often the case that men live in modest apartments on Main Street while women are struggling to stay off of Skid Row. Here’s a look at some ways men and women differ in anticipating and preparing for retirement, and how that plays out in their twilight years.

Anticipating Retirement

Women look forward to retirement more than men, a survey by the investment firm Ameriprise found, but they feel less financially secure. The majority of men, 56%, were confident enough to plan their own retirement, whereas 49% of women felt they were well prepared.

Another retirement survey by the online investment site TD Ameritrade found further differences between the sexes. Outliving savings was a top concern for 42 percent of men and 37 percent of women, although 10 percent of women experience "extreme stress" about managing their retirement savings compared to 4 percent of men.

Both genders agreed that healthcare expenses were a major concern as they approach retirement. It was the number two issue for those surveyed, with both 38 percent of women and 38 percent of men admitting to worrying about it.

Life’s Curveballs

Some factors affecting retirement funds are difficult to control. Although men as a group were more impacted by job loss in the recession, women still earn less than men when performing the same work. The U.S. Department of Labor says that women at age 65 can expect to live another 19 years, which is 3 years longer than a life expectancy for man of the same age. And women also often marry older men, so this increases their time living alone during retirement. Those last two factors mean that women must save more for retirement than their male counterparts (despite the first factor of earning less than men).

Women are more likely to have part-time jobs that don’t provide retirement plans, says the Department of Labor, and they are more likely than men to take off time to care for loved ones. Candace Bahr, co-founder of Bahr Investment Group, an organization promoting financial independence for women, calls this time off "the sandwich issue," as it does not just include women caring for their children, but then also taking time off to care for elderly family members.

Although women aren’t the only ones who take these breaks, it impacts more women and they take off longer than men. The Ameritrade survey reports that of the 57 percent of respondents who reported they were behind in their retirement savings, 61 percent of women reported that raising children as the cause, compared with 43 percent of men. cites the average time off for women as 10 years, whereas for men it’s 1 year.

However, as more men are attempting to balance their work lives with domestic responsibility, and they seek jobs with more flexible schedules to accommodate this, Grace Protos of the U.S. Department of Labor’s Women’s Bureau anticipates that this will begin to impact men’s retirement savings as well.

Obviously, less time working equals lower lifetime savings for women, and also affects their eventual Social Security benefits. The Ameritrade study found that 47 percent of women cited "having to work longer to supplement Social Security income" as one of their top two retirement concerns, as compared to 35 percent of men.

There are some recent improvements to the Social Security system, though. The Social Security brochure, ‘What Every Woman Should Know,’ reports higher benefits for surviving spouses, and benefits for disabled spouses also increased. For divorced women, the minimum number of years the couple must be married for the divorced spouse to qualify for benefits decreased.

An Ounce of Prevention

Although some of the unavoidable factors above can seem bleak, they’re not a sentence to end-of-life poverty. One significant but avoidable way women further undermine their future retirements is that, according to the Department of Labor, women invest more conservatively than men. “If you are not willing to take on any risk, you’re going to get paid very low rates of return that won’t even keep up with inflation,” says Bahr. “Over time women’s portfolios don’t tend to grow, and women find themselves in the position of not having enough.”

"As women are becoming more educated, they realize the value of adding risk-type investments with more potential for growth in their portfolio,” says Bahr, but she adds most women generally don’t embrace making calculated risks, even when facing the uncertainty of investing now can prevent much more dire uncertainty in the future.

“Women are great savers, [but] not such great investors,” she says. To combat this, Bahr’s organization launched Money Clubs, where women in around 250 clubs nationwide meet to talk about money and investing, hold each other accountable, and compare their progress.

Another issue facing women is not getting involved enough in preparing for their futures. The Department of Labor cites that only 45% of the 62 million wage and salaried women (21- 64) participated in a retirement plan.

“We find they’re not fully investing in their 401(k)s, setting aside money, and investing in the stock market, even though [women are] earning more than they ever earned. I’ve been doing this for 30 years, and I still do come across people who have never touched a checkbook who have no idea how to pull their lives together,” marvels Bahr. “It seems unbelievable. We have a bumper sticker: ‘A man is not a financial plan.’ We cannot rely on the men in our lives completely because it is likely that they will pass away before us so it’s important to always have some involvement in our financial lives.”

"[There’s a] statistic: [something like] 60% of widows within the first two years of their husband’s death find themselves living below the poverty level,” says Bahr. “The reason we believe that happens is when their husband passes, their Social Security will increase, but they don’t have sufficient assets to live off of, and then they’re living a long time they find themselves in difficulty relatively quickly.”

All the more reason for both women and men to better prepare before it’s too late. The good news is that once women get educated and they establish a long-term goal, they are fantastic at following through. Bahr notes this is especially true if they understand how it impacts family. “Women don’t want money just for amassing money, we want to help people and be philanthropic. Then when they understand how that fits together, they do very well.”