Preparing for retirement is a challenge — but for women, the challenge is more complex.
That’s according to a Pershing guide offering suggestions on retirement preparation for women in each decade of their adult lives.
Women face specific challenges in preparing for retirement that men do not, the guide said.
They have longer life expectancies — those who reach age 65 are expected to live 2.3 years longer, on average, than men who reach the same age, meaning they’ll be retired longer and as a result need more money to see them through.
Women who retired in 2012 are expected to spend 15 percent more time in retirement than men (20.5 vs. 17.9 years).
But funding that isn’t happening.
While they need higher savings balances to face retirement, they have less, thanks to making less during their working years: women get nearly a third less compensation than men in those all-important paychecks.
They spend less time in the workplace, leading to gaps in employment — because they’re the ones who often take off to become caregivers for aging parents or others.
They face higher medical costs: Women have a higher chance than men of being impacted financially by chronic or terminal illnesses.
And, to add insult to injury, they pay higher taxes in retirement: 80 percent of women in their final years will be single, facing higher tax rates than married couples do.
So what’s a woman to do? The guide has come up with ways for women to prioritize retirement preparation, no matter what decade of their working life they’re in.
1. Age 20-29
For women in their twenties, Pershing suggests that women make a clear plan for paying their current expenses, paying down debt through loan repayments, and saving for major purchases such as a wedding, home, or car.
Beginning savings — even a small amount weekly put into an interest-bearing account, for emergencies such as a lost job or unexpected expenses — should also be part of the plan.
In addition, this is the time for women to take advantage of their employers’ retirement plans, including any dollar match.
If there is no plan available, they should open an IRA and make monthly contributions.
2. Age 30-39
As women age and hit their thirties, they should look into lowering any existing loan payments, perhaps by refinancing a mortgage and/or student debt.