Retirement planning for women requires that you look at specific areas. While tax rules and investment concepts are the same no matter who you are, women typically have a different burden than men, all other things being equal.
But everything isn’t equal: Women live longer, which may require more financial resources, and they may have different experiences in the workplace.
Single women—whether divorced, widowed, living independently, or partnered and keeping finances separate—have different challenges than men of the same age and health status. As a result, retirement advice for women needs to account for these issues.
With the right information, women can take steps to improve their chances of success, and that’s what we’ll discuss here. Women are smart long-term investors, and they’re often well-prepared for retirement.
On this page:
- Control What You Can Control
- Make a Plan
- If Coupled: Trust, but Verify What You Sign
- Contribute to Your Spouse’s IRA? (if applicable)
- Have Money In Your Name
- What Is the Retirement Age for Women?
Control What You Can Control
Starting with the basics, the most important thing most people can do when it comes to retirement are:
- Save money for the future. The more, the better. Retirement accounts are great, partly because they’re in your own name, which can protect your assets from debts that a spouse or somebody else takes on.
- Invest wisely. Some risk may be necessary as you pursue growth, and it’s crucial to avoid catastrophic mistakes.
- Plan for a long life. The longer you live, the more you spend on healthcare, and women are particularly likely to be on their own at some point.
We’ll get into specific retirement planning tips for women, but it’s essential to start with those basics.
Also, anything you can do to improve your earning power in the years before retirement can be helpful. However, you might not have many working years left—if you’re 60 or 65, retirement could be just a few years away.
Maximizing your earnings may be easier said than done. We know that women earn, on average, about 82 to 85 cents for each dollar men earn (depending on where you look and how old the data is). That wage gap has real consequences when it comes to retirement savings. Lower earnings:
- Provide less resources for saving each month—there’s not as much left over after paying current living expenses
- Result in lower Social Security and pension calculations, leading to smaller retirement income streams
While that needs to change (for a variety of reasons), and we can do better, women reaching retirement age today have probably been affected by the gender wage gap. Plus, women have historically tended to take time off to care for loved ones, including children and aging parents, which can compound things.
Read on for retirement advice below, or listen to some of this discussion by video.
Make a Plan
Retirement planning is especially important for women. By making a plan, you can improve your chances of success, identify opportunities to improve your retirement readiness, and potentially avoid a few big mistakes.
A plan does not need to be a 45-page book. However, you want to know the answers to the questions below.
When Can I Retire?
You can retire at any age, but you need financial resources to stop working. Those resources might come from savings that you build up over time, so reaching a certain level of savings might enable you to stop working.
Social Security and pensions also kick in at certain ages. You don’t necessarily need to keep working until you get those benefits, but for most people, that income is essential. As a result, your retirement date may depend on when you qualify for benefits.
Tax laws could affect when it makes sense to withdraw money from your retirement accounts. The standard age for IRAs is 59.5 years old, but it may be possible to tap funds earlier than that. For example, leaving a job at age 55 or later could make it possible to tap 401(k) savings without early withdrawal penalties.
How much can I pay myself?
Your retirement income comes from several sources. You usually get a base of income from Social Security and pensions (if any), and you can supplement that income with your retirement savings. Your base income is fairly easy to understand, although you need to make smart decisions about taking those benefits. For instance, the age at which you begin affects how much you’ll receive each month. Survivor benefits and other factors could also come into play.
Withdrawals from your retirement savings need to last for your entire life. You’ll probably want monthly income, and you need a buffer to pay for spending shocks like long-term care.
For women, this can get particularly tricky because of longevity: On average, women live about five years longer than men. As a result, you need to fund more years of withdrawals. If you happen to be married to a man, there’s a good chance you’ll outlive him.
How much will healthcare cost in retirement?
Annual estimates: For a 65-year-old woman using Medicare, you might expect out-of-pocket spending to be between $4,800 and $10,000 (or more). Your spending depends on your health, where you live, which supplemental insurance products you use, and other factors. As you age, those costs tend to increase.
Lifetime estimate: If you’re retiring now at age 65, Fidelity suggests that women have retirement savings and income to cover roughly $204,000 of out-of-pocket expenses throughout your remaining years. But you won’t spend that all at once. Your income (like Social Security) can help pay for care.
LTC: If you require long-term care, such as nursing home care or in-home assistance, you may incur additional costs. Using national averages, in-home care and assisted living might cost roughly $4,500 per month, while nursing home care can be significantly more expensive. Formulate a plan for paying for LTC as soon as possible, whether you’ll pay yourself or go on Medicaid.
When is the best time to claim Social Security?
You can take benefits as early as age 62, but you get a reduced benefit at that age. Unfortunately, that reduction lasts for the rest of your life. Especially for women, who tend to live long lives, it might be best to wait for a bigger benefit.
You don’t need to start taking Social Security income immediately when you retire. If you have retirement savings, you can potentially spend from those assets while letting your Social Security benefit increase. That’s a strategy that requires careful attention, but it can work well.
Your benefits stop increasing after age 70, so it doesn’t make sense to delay beyond age 70. While you’re waiting to take benefits, it could make sense to take advantage of years with low taxable income and explore strategies like Roth conversions.
How much should a single woman have for retirement?
When you’re single, there’s one Social Security payment or pension income in your household. As a result, you may need more retirement savings to supplement that income. The exact amount you need depends on factors like how much you want to pay yourself, how your investments perform, and more.
With the average Social Security retirement payment just over $18,000 per year, couples have an advantage. When a single woman’s financial need is above that level, there’s a bigger gap—because you don’t just double that income like a couple does.
How much do you need? There are several ways to calculate how much money you need to have saved. A detailed financial plan is best, but the 4% rule can help you quickly estimate how much money you need to take a given level of withdrawals from your savings. Financial needs for a single woman may need to include an extra buffer for healthcare, as you may not have somebody at home to help when your health begins failing.
Average savings: Single women have retirement savings, on average, of $273,341. The median amount for unmarried women is lower, at $117,173. That’s according to the Center for Retirement Research at Boston College (Hou, 2020), and excludes other forms of wealth, such as equity in your home. Another study from Fidelity showed that women who have been in the same 401(k) plan for over 10 years have $297,900 (including employee and employer contributions).
How much should single women save to prepare for retirement? Start by figuring out how much you want to withdraw each year (after Social Security or pension income), and multiply that number by 25. Or multiply by 33, if you want to be conservative. If you can reach that milestone by your retirement date, you are in decent shape.
How do most women invest? About 72% in stocks.
While data on various gender categories is scarce, some people say that women tend to invest more conservatively. But research suggests that women are open to taking just as much risk as men. Christine Benz and colleagues at Morningstar found that in the aggregate, women may indeed hold less stock than men. But when you adjust for income differences (likely due to the gender wage gap), the holdings look very similar.
Of course, the appropriate level of risk depends on things like your age, your time horizon, your preferences, and other factors. This free risk-tolerance quiz developed with input from financial psychologists can help you get a handle on your preferences.
Consider Spousal IRA Contributions
Depending on your marital status and tax-filing decisions, it may be possible to use so-called “spousal” contributions to an IRA. With that strategy, a spouse can contribute to her non-working spouse’s IRA as long as there is sufficient income on your tax return.
This strategy can help to ensure that non-working spouses (who might be spending time caregiving—or who aren’t earning income for any other reason) have retirement savings in their name.
If Coupled: Trust, but Verify What You Sign
If you’re in a relationship and your spouse or partner asks you to sign documents, always make sure you know what’s going on.
There’s nothing wrong with having a partner coordinate financial transactions if you’d rather spend your time and energy on other things—it happens in many households without problems.
But you need to at least know what’s going on with your finances at a high level, such as what your assets are doing and how much debt you’re responsible for. In situations of financial abuse, you may end up in a difficult place: Some people have been known to keep all debt in a spouse’s name or do other nasty things.
Any time you sign a loan application, you might be 100% responsible for paying off the debt. It might not matter if somebody else signs with you. Lenders try to collect from whoever is best able to pay, and if that’s you, lenders will attempt to collect from you. Even a divorce decree generally doesn’t change your agreement with a lender.
This may be easier said than done in some situations, but it’s ideal to develop strategies to delay and read everything. You can explain that you just want to know what to expect in case something happens to your spouse or partner, and that you’ve heard it’s never wise to sign a document before reading.
Have Money in Your Name
If you’re married or partnered and you aren’t the primary “financial manager” in your household, take steps to ensure your financial security. It’s a best practice to have assets in your name. Retirement accounts are typically individual accounts (in your name only), so those are a good start.
It may also be beneficial to have bank accounts and other assets in your name—just in case. Ultimately, it’s up to you and your partner, but a system of yours/mine/ours might make sense for keeping some aspects of your finances separate. You share expenses for common needs, and you have your own accounts to use as you please.
What Is the Retirement Age for Women?
Women in the U.S. typically retire between age 60 and 69, with the average age being 64, according to the National Council on Aging. But there are certainly exceptions. Plus, different sources cite different numbers. For example, The Center for Retirement Research reports an average retirement age for women at 63 years old (with men in that study retiring at 65).
Again, there is no gender-specific retirement age, broadly speaking. But certain benefit programs might require you to wait until you reach a certain age to take benefits.
It’s interesting that data shows women retire earlier than men—even though they live longer. Why is a woman’s retirement age lower than a man’s, on average? In traditional married couples, a woman is often younger than her male spouse. Plus, women are more likely to leave the workforce due to caregiving and downsizing.
Historically, it’s common for a married couple to consist of a woman that’s several years younger than a male spouse. If a couple stops work at the same time, that would bring women’s ages down. Plus, if women take a bigger role in caregiving (for aging parents or grandchildren, at this stage in life), they would tend to leave the workforce sooner.
If you assume most of the data comes from traditional heterosexual couples, that all makes sense. But single women and same-sex couples would experience different conditions. To account for that, research also demonstrates that women and people of color are more likely to lose their jobs when employers cut staff.