Women face some retirement challenges that men are less likely to experience. Career interruptions, caregiving responsibilities, divorce, widowhood, and longer life expectancy can affect how much women save and how long those savings must last.
I have previously discussed the motherhood penalty and the financial effects of longer life spans and caregiving responsibilities. Here, we look at six additional threats to a woman’s retirement and practical steps to address them.
Key Points
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6 Key Threats to a Woman’s Retirement.
1. Divorce and Widowhood.
Divorce and widowhood are two of the most significant life changes that can affect a woman’s retirement. Both can create emotional and logistical challenges and reshape income, expenses, assets, and long-term financial security. Helping women navigate these new beginnings is a central focus of our work at Apprise.
Divorce
Divorce often requires couples to divide marital assets, leaving each person with fewer resources than when they were a household. Legal and other professional costs can further reduce those resources. Women may face an additional challenge if caregiving responsibilities have already reduced their earnings, career advancement, or retirement savings.
For some women, divorce can feel like starting over financially. Rebuilding savings and creating a retirement plan for one household instead of two can take time.
Widowhood
Widowhood creates a different set of financial challenges. Household income often falls after a spouse dies, even though many household expenses remain. That can make it harder to maintain the same lifestyle, save for retirement, or fund other goals.
A spouse’s death can also bring unexpected expenses, including funeral costs, medical bills, and legal fees. These costs can strain savings at an already difficult time.
A surviving spouse may qualify for Social Security survivor benefits. But the household will no longer receive two Social Security benefits, which can reduce monthly income.
According to a frequently cited U.S. Census Bureau figure, the average age of a widow is only 59. As a result, widowhood can also occur well before retirement, sometimes while a woman is still raising children or supporting other family members. That can affect both current income and future retirement savings.
Divorce and widowhood involve much more than money. Grief, stress, and new responsibilities can make it difficult to focus on financial decisions, especially long-term ones.
What You Can Do:
- Divorce and widowhood can be emotionally exhausting. Support groups can provide practical help and a sense of community. Widows may want to reach out to the Modern Widows Club. Local support groups for divorced women are also available.
- Review your finances after a major transition. Revisit cash flow, taxes, insurance, retirement projections, estate documents, and beneficiary designations. A financial advisor can help you identify which decisions need immediate attention and which can wait.
- Stay involved in household finances and, when possible, continue building retirement savings in your name. Financial awareness and access to your resources can be especially important after a major life change.
- Review your insurance coverage as your circumstances change. Life insurance may protect people who depend on your income, while long-term care coverage may help cover future care costs.
2. Career Interruptions.
Women often take on more caregiving responsibilities for children, aging parents, or other family members. That can lead them to reduce their work hours or leave the workforce temporarily. Over time, those interruptions can lower earnings, limit career advancement, reduce employer retirement contributions, and leave less money for retirement.
Caregiving also competes for your income, time, and energy. When today’s family needs take priority, saving for retirement can become much harder.
What You Can Do:
- Save consistently whenever you can. Automating retirement contributions can make saving easier to sustain. If your income falls temporarily, consider reducing the amount rather than abandoning the habit altogether.
- Build a support network. Family, friends, and community resources can help share caregiving responsibilities and give you more time for your own needs, such as financial planning.
- Consider working with a financial planner who understands how caregiving, taxes, retirement, and life planning intersect. Good planning can help you evaluate the trade-offs you face today without losing sight of your long-term goals.
3. Part-Time or Non-Traditional Work.
Part-time, contract, and other non-traditional work can reduce both current income and access to employer-provided benefits. Lower earnings may make it harder to contribute to retirement accounts. Some workers may also receive smaller employer matches or have limited access to pensions and healthcare benefits.
Years of lower earnings can reduce your future Social Security benefit because your benefit is based on your earnings history.
Saving less also means fewer dollars have time to grow and compound.
What You Can Do:
- Set a retirement savings target that fits your income. If your earnings vary, consider saving a percentage rather than committing to the same dollar amount each month.
- Plan for healthcare costs separately. Consider how you will pay for coverage before Medicare, as well as premiums and out-of-pocket costs after Medicare coverage begins. If you are eligible for an HSA, it can also be a valuable long-term savings tool.
- Other income sources may give you more flexibility. Freelance work, consulting, rental property income, or investment income can help, but each comes with its own risks, taxes, time commitments, and responsibilities.
4. Increased Need for Long-term Care.
Living longer is generally a good thing. But a longer life can also mean more years in which you may need help with daily activities or other forms of long-term care. Women are also more likely to develop certain conditions that can limit their independence later in life. Long-term care can include help with mobility, personal care, and managing health needs.
What You Can Do:
- Consider long-term care insurance while you are still healthy enough to qualify. Buying coverage earlier may lower the initial premium. Whether insurance makes sense depends on your resources, goals, and ability to pay for care out of pocket.
- Include potential long-term care costs in your retirement plan. Consider how much care you could pay for yourself, what insurance might cover, and how different care scenarios could affect the rest of your plan.
- Invest in your health and independence, too. Regular exercise, healthy eating, preventive care, and social connection can support your quality of life as you age.
5. The Financial Challenges of Living Alone.
Many women will spend at least part of their retirement living alone. Some choose that independence. Others find themselves living alone after divorce or the death of a spouse. Either way, your retirement plan should account for the possibility of living alone. Living alone also means there is no one else to share housing, utilities, maintenance, and other household costs. If your housing needs change as you age, finding an affordable option that also provides the support you want can get harder.
Living alone can also increase the risk of social isolation. Strong relationships and regular social interaction matter not only for emotional well-being but also for the quality of your retirement.
What You Can Do:
- Test whether your retirement plan works if you live on one income and pay household expenses on your own. Housing, healthcare, and long-term care costs can look very different for a one-person household.
- Downsizing or co-housing may also be worth considering. These choices can reduce housing costs and maintenance while, in some cases, providing greater community and companionship.
- Build community intentionally. Friends, family, clubs, volunteer organizations, and other groups can create both social connection and a stronger support network as you age.
6. The Financial Confidence Gap.
Financial knowledge matters. But confidence matters, too. Research shows a financial literacy gap between women and men. However, confidence may account for part of that gap.
Understanding basic concepts such as retirement accounts, investing, taxes, and Social Security can help you make more informed decisions. You do not need to become an expert, but knowing enough to ask good questions can make a meaningful difference.
Women are more likely than men to choose “I don’t know” when that option is available. I have seen something similar in financial workshops I have led. When “I don’t know” was not an option, women’s results improved. Research also suggests that women may know more about finances and investing than traditional financial literacy scores indicate. Confidence appears to play an important role.
Women also tend to trade less frequently than men. That restraint can reduce trading costs and may lead to better long-term investment results.
What You Can Do:
- Build your knowledge where you feel uncertain. Books, courses, workshops, and reliable online resources can help you better understand retirement accounts, investing, taxes, Social Security, and other financial topics.
- Ask questions. A good financial advisor should help you understand not only what they recommend but also why. That matters to us at Apprise. Our name means “to inform,” and we want our clients to understand the reasoning behind our recommendations.
- A financial or life plan can also help you align individual decisions about investments, retirement savings, Social Security, taxes, and other financial matters with the life you want to live.
- Consider connecting with financial education groups or other women’s communities. Learning from others’ experiences can build both knowledge and confidence.
Closing Thoughts: Planning Creates More Options
These six risks do not mean women should approach retirement with fear. They mean retirement planning should account for the life events women are more likely to experience and the financial choices those events can create.
A strong retirement plan should protect more than your money. It should also give you room to care for your health, relationships, and the parts of life that matter most to you.
If you are facing a major life change or wondering whether your life plan still aligns with the life you want, we would be glad to talk. Schedule a call to learn more about how Apprise Wealth Management can help.
Our practice continues to grow through introductions from our clients and friends. Thank you for your trust.
If you would like to discuss financial topics, including navigating new beginnings, managing your investments, creating a life plan, or saving for retirement, please schedule a call or a Zoom virtual meeting. We will be in touch.
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For firm disclosures, see here: https://apprisewealth.com/disclosures/
Phil Weiss founded Apprise Wealth Management, where he works with women facing new beginnings. He started his financial services career in 1987 working as a tax professional for Deloitte & Touche. For the past 25 years, he has worked extensively in the areas of personal finance and investment management. Phil is a CFA charterholder, a CPA, and an RLP®.
