Women today have more financial freedom than ever before yet still face economic obstacles that are distinct from men, and these challenges can become more pronounced in retirement.
On average, women live five years longer than their male counterparts, according to U.S. Census Bureau data, meaning they are more likely to be alone and financially self-reliant in their later years. Women are also more likely to earn less money and take career breaks to assume caregiver roles, says certified financial planner Jennifer Harper.
"All of these are reasons why women need to be particularly careful about their own financial planning," Harper says.
As the director of Bridge Financial Planning, Harper helps women, men and families of all ages make savvy financial decisions. She says the basic rules for managing money — live below your means, monitor your credit score, build an emergency fund — are the same for everyone early in life. However, things can change if a woman decides to scale back or stop working to raise children.
"Many people don't think to calculate the future loss of income due to Social Security income," Harper says. "That's true whether it's childcare, eldercare — there's not just a current expense, there's also future expense."
Harper says she also sees this hurt women more during divorce.
"A lot of times the financial conversations in divorce are strictly around getting an equitable distribution of assets to both spouses, and you need to be very aware of what happens to future income, as well," she says. "If they made some of those sacrifices for the family during their career, that comes back to haunt their financials later."
A 2018 study by Merrill Lynch and Age Wave found that the average retirement in the United States costs $738,000, yet only 9 percent of American women have $300,000 or more saved.
While the figures can seem daunting, Harper says it's never too late to start saving.
"There's always time to make progress," she says.
If taking time away from work, Harper says women should keep their skills sharp through continuing education so they're ready to step back into a career. Married people can also make use of spousal IRAs.
That same report found that women are more confident than men when it comes to paying bills and budgeting, but have much less confidence when it comes to investing.
"Don't be afraid to ask questions, don't be afraid to get help, take ownership and be empowered to make good decisions for yourself and your family," Harper says.
While Harper says it's important to be aggressive enough to hit your investment goals, it can be a good thing that women investors typically trade less than men.
"That can work for us and against us," she says. "People who trade on emotions or see a bad headline and start making changes to their investment portfolio are often harmed by those emotional decisions, so more of that hands-off approach that women tend to have can be a positive thing, too."
Kevin Rose, a certified financial planner at Market Street Partners, says when women enter their 50s, it's time to keep more of an eye on their investment portfolios and scale back risks.
"At that point, you're getting closer to actually having to tap into that money," Rose says. "You want to make sure you don't get hit too hard when there's a down market."
Having a will, powers of attorney for health and finance, health care directives and beneficiary designations in place at this time are also important, he says.
Harper says it's best to prepare for retirement three to five years in advance.
"Waiting until the last minute to make those decisions, oftentimes some doors are already closed," she says.
For couples, Rose says it's important for both people to be on the same page with key financial information before reaching their later years.
"A lot of times, people aren't transparent or don't communicate on the financial front," Rose says. "It's either taboo or one spouse is disinterested, but you want to make sure you're leaving your spouse with the ability to carry on."
Although life insurance is a big help, he says people often forget smaller things like sharing passwords, login information or where they hid the lock box key.
Harper says it's also important for everyone to keep the challenging norms that make saving for retirement more difficult for women.
"There's still a pay gap, so there's something bigger than just our own behavior as women guiding that gap," she says. "It's not all on us to fight harder. It's also on institutions to be more diverse in their leadership, more diverse in their boards, with more policies that accommodate everyone."