Most women save for retirement but don’t know how to make that money last.

3 minute read

Women earn a fraction of what men do but live longer.

There are many obstacles in the way of retirement for women and new research highlights how difficult that can be to navigate. A joint survey from nonprofit Alliance for Lifetime Income (ALI) and HerMoney Media reveals most women are saving for retirement but not enough to match their unique challenges.

What challenges? The poll of more than 1,000 women reveals that 90 percent of respondents contribute to 401(k) or Roth IRA saving plans. But more than half (53 percent) don’t “know how to make their money last through retirement.”

Having a retirement account is great. But according to the survey, one of the major flaws is that those industries need to teach women how to budget that income when they’re no longer working.

“Many financial professionals have done a disservice to retirement savers by focusing exclusively on just investing and accumulating savings for retirement,” said Jean Statler, ALI CEO. “I’m not at all surprised that women are saving more, but so many still don’t know how to make that money last for 20, 30 or more years in retirement. It’s critical that we change that.”

Here’s why that system needs to change…

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Women live longer but earn less

Even though most women are taking steps to save, the U.S. Census Bureau reports that 50 percent of women ages 55 to 66 don’t have any money set aside for retirement.

In many cases, it’s not for lack of trying. Women face several obstacles when it comes to their finances. The latest research from the Centers for Disease Control and Prevention shows the average woman lives to 81. Meanwhile men typically only make it to 76 years old. Then there are unique lifestyle challenges women face.

The National Institute on Retirement Security (NIRS) found that women are far more likely to have to take a break from their careers, work part-time, or step away from their careers entirely to step into the role of a caregiver.

Because of gender stereotypes, women hold about 60 percent of all caretaking roles – often stepping up to take care of their children, an ill spouse, or elderly parents.

“This time spent out of the labor force negatively impacts women’s ability to save for retirement,” the NIRS wrote. “Even when women work full-time and for a full career, they typically earn less than men.”

Women who take even just a one-year break from their career. Women who make about $75,000 a year, but decide to take just a year-long break from working, miss out on about $159,700 in retirement savings.

Even if they don’t take a break or leave their careers, women only earn about 84 percent of what men do.

Find out: 6 Ways Being a Caregiver for an Aging Parent can Take a Financial Toll

Solution: guarantee income

It’s important to know how to manage finances and make savings last, especially because of these disadvantages.

HerMoney CEO Jean Chatzky recommends that women find a source of consistent and passive income.

“The women we studied are almost solely focused on saving as the end all be all for retirement when it’s equally important to build a retirement income plan that will make your money last,” Chatzky said. “A pension or investment that provides a paycheck for the rest of their life – would alleviate their concerns about running out of money.”

Most jobs don’t offer pensions anymore, but anyone can sign up for an annuity. Annuities are sort of like insurance for your retirement. Insurance agencies, banks, and other financial professionals might offer them.

There are different kinds of annuity plans. Depending on what you sign up for, you can make one or multiple payments in exchange for benefits. That can include guaranteed income as a monthly or even a lump sum payment.

Only 3 percent of the 1,000 women that ALI polled see the value in an annuity.

Statler from ALI explained that financial planners and advisers can help prepare women for retirement by helping them “shift their thinking to retirement income planning and consider protected income from an annuity to help ensure they never run out of money.”

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About the Author

Gillian Manning

Gillian Manning

Gillian Manning graduated from Florida Atlantic University in 2021 with her bachelor’s degree in journalism. At FAU she served as the editor-in-chief of the student-run newspaper, the University Press. During her time there, the paper saw an increase in content production, readership, and engagement. Before she even graduated, Gillian was published in various outlets such as South Florida Gay News and the Boca Raton Tribune.

Published by Debt.com, LLC