Understanding Why Women Worry About Outliving Their Retirement Savings

Understanding Why Women Worry About Outliving Their Retirement Savings

August 10, 2023

It's completely understandable that many women have concerns about running out of retirement savings, and there are various factors contributing to these worries. Let's explore the main reasons why women tend to have this fear more than men.

Women Expect To Live Longer

It's a fact that women generally have a longer life expectancy, which means they may require more financial resources to sustain their retirement lifestyle compared to men. Whether they are married or single, women often anticipate outliving their husbands or partners. With the potential for a longer lifespan, it's natural to question whether their savings will be sufficient in the long term.

Women Are More Risk Averse

While women need more funds for retirement, they often have less saved compared to men. This can be attributed, in part, to their approach to money management. Women tend to be more cautious and risk-averse when it comes to investing their savings. It's important to consider the difference between saving and investing because conservative strategies may result in lower returns. Men, on the other hand, typically embrace more aggressive investment approaches, potentially leading to higher returns over time.

Women Earn Less Money

Unfortunately, there remains a gender pay gap where women, on average, earn less than men. Even if women save the same percentage of their income as men, the actual dollar amount saved may not be equivalent. While progress is being made, we still have work to do to achieve true gender pay equality.

Women May Have a Fear of Money Management in General

Some women may harbor concerns about managing their money overall, including their retirement savings. This is especially true for widows who may have relied on their spouses to handle the finances. Taking over financial responsibilities after the loss of a spouse can be challenging, particularly if they haven't been involved in money management for many years. The fear of the unknown can contribute to their worries about not saving enough.

Putting Retirement Savings Fears to Rest

Although women face several challenges when it comes to saving enough for retirement, proper planning can help alleviate these fears. Working with a knowledgeable financial advisor to create a tailored plan specifically for women can provide peace of mind.

Even if you're already maximizing your 401(k) or IRA contributions, it's crucial to have someone who can run projections, design a plan, and keep you informed about your progress.

Remember, there are professionals available to help you navigate the uncertainties of the future. Financial advisors who act as fiduciaries can offer guidance, help you plan effectively, and ease your worries. Clients often express initial concerns when meeting with us, but through continuous evaluation and reassessment of their financial situation, they find comfort and relief.

Whether or not you choose to work with an advisor, it's vital for every woman to make regular contributions to their retirement savings accounts. It's not just about meeting the minimum requirement; strive to maximize your contributions. We understand that the thought of reaching the maximum contribution amount for a 401(k) can be daunting, but consider building up to it gradually. As you receive raises, allocate half of the increase towards your retirement accounts, such as your 401(k) or IRA. This gradual approach can make the process feel less intimidating over time.

Investment advice offered through Stratos Wealth Advisors, LLC, a Registered Investment Advisor. Stratos Wealth Advisors, LLC and Flagship Financial Advisors are separate entities. Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Flagship Financial Advisors, or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Flagship Financial Advisors.