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Key Takeaways
- Many women expect to live to age 90, yet a significant percentage of older women are unprepared for retirement.
- 27% of Generation X women and 19% of baby boomer women have saved less than $25,000 for retirement.
- Persistent gender pay gaps, career interruptions for caregiving, and limited access to retirement plans contribute to women’s lower retirement savings.
- Women can strengthen their retirement security by saving early, working longer, and delaying Social Security to maximize benefits.
Women are planning to live long lives: their median anticipated life expectancy is 90 years, according to a new survey from the Transamerica Center for Retirement Studies.
Despite this, many women don’t have a lot saved for retirement. More than one-quarter (27%) and nearly one-fifth (19%) of Generation X and baby boomer women, respectively, report having less than $25,000 worth of retirement savings. What’s more, a greater percentage of women than men have saved less than $10,000 or nothing at all (22% of women and 15% of men, respectively). Across every generation, men reported having significantly higher median household retirement savings than women.
So why do women have far less saved for retirement even though they generally have longer life expectancies than men? (At birth, the life expectancy for men is 75.8 years. For women, it’s 81.1 years.)
Well, there are many reasons. Among them are the wage gap, taking time out of the workforce to be caregivers, and reduced access to retirement benefits compared to men.
Important
Women tend to receive smaller Social Security benefits than men, as benefits are based on your 35 highest earning years and women often earn less than men do.
What Can Women Do To Boost Their Retirement Savings?
Beyond landing a higher paying job and earning more, there are several things women can do to grow their retirement savings.
Delay Collecting Social Security
By waiting until you’re your full retirement age (age 67 for those born in 1960 or later) or even later to collect, you can receive greater monthly Social Security benefits. In fact, for every year you delay from your full retirement age to age 70, you’ll receive 8% more in benefits. This means that if you delay getting benefits until you’re 70, the benefit you will receive at 70 will be 124% of the benefit you would have received at your full retirement age.
Research indicates that couples tend to retire around the same time, and since women often marry older men, they may retire at younger ages than their male spouses. As a result, women may miss out on greater monthly benefits.
And if you collect a spousal Security Benefit instead, you should consider waiting, too. If you start collecting the spousal benefit at your full retirement age, you will maximize the amount you’ll receive, earning half of your spouse’s full retirement benefit.
Consider Working Longer
Since women have longer life expectancies than men, they may need more retirement savings, as well. Working longer can help you put away more for retirement, delay collecting Social Security, and even boost your Social Security benefit if you have higher earning years close to retirement.
Start Saving for Retirement ASAP
By saving for retirement now rather than later, you can benefit from the power of compound interest, which is interest you earn on your accumulated interest as well as your contributions.
For example, someone who puts away $500 a month towards retirement for 40 years would have more than $1.57 million, assuming an 8% annual return. In contrast, someone who invests $500 a month for 30 years would have nearly $685,000, assuming the same return.
