Why women need to plan differently

August 31, 2023

Allworth Co-CEO Scott Hanson shares some of the key reasons why women need to approach retirement planning from a different perspective.

Be it for yourself, your mother, your spouse, a daughter, a relative, or a dear friend of 40 years, the fact is that the financial and retirement planning needs of women differ vastly from those of men.

But how?

According to the National Council on Aging, women typically:

Make less money than men
Are more likely to work part-time
Take more breaks from work to raise children and care for family
Have careers that statistically offer fewer retirement benefits
And are more likely to suffer from chronic, expensive, and debilitating diseases ¹

Now, before I cover the things that women can do to help them make up ground on their male counterparts and retire better, it is important to understand that a full 50% of people (both women and men) are forced to retire earlier than planned.

You may hear that 50% stat and think, “Well, what’s a year or two earlier than planned?”

But it is far from that simple. That is because people who are forced to retire – usually due to a health emergency – are also typically in their highest earning and saving years. And, depending on precisely when a forced retirement occurs, that means that you are just reaching your earnings and savings peaks and could easily be deprived of the bulk of the money you would have saved had you been able to work another five or ten years.

Here are quick stats on the ages that women retire:

A total of 3% of women retire before they reach age 50
A total of 18% of women retire before they reach age 59
And a total of 53% of women retire before they reach age 64 ²

We can see that women typically earn less money than men over the course of their careers. And I have touched on the sobering statistics that, due to health emergencies, a significant percentage of women are forced to retire earlier than planned.

Next, when you consider that, according to the Centers for Disease Control, women, on average, now live a full six years longer than men (79 years versus 73), or that women who reach age 65 have an 80% chance of living beyond age 86, and you can understand that women are not only likely to be forced to retire earlier, but that they also live substantially longer than men.²

So, when it comes to money and retirement, what concerns women the most?

The National Council on Aging surveyed 1,500 women over age 50 to determine their most pervasive worries and needs related to retirement, and this is what they had to say.¹

While paying for healthcare during retirement was their #1 worry, the survey found that concerns about financial planning rated highly, as well.

They were:

26% said they would like guidance about when to apply for Social Security and Medicare
- (Applying at the best possible time for you could mean tens of thousands in extra income over the course of your retirement.)
19% said they would like help minimizing taxes when making withdrawals from their retirement plans
18% want to know how to use their savings to create investment income
17% would like budgeting advice that preserved their savings ¹

With all that in mind, what three things can women do to get better prepared for an earlier, longer, more expensive retirement?

1. Understand your unique challenges

First, no matter where you land on the age and savings spectrum, be proactive. After more than 30 years of advising, and with over 20,000 clients nationwide, we understand the challenges facing pre- and recent retirees.

As a woman, accept that you need to plan differently than men, and vow to work with someone who can help you prepare for the widest range of contingencies and outcomes.

2. Imagine your future

What do you want from your future? What are your goals and dreams?

Often, the best first step is to envision the future you want. Will you have enough money for a 30-year retirement? Do you want to travel? Keep the house? Afford healthcare emergencies?

If you are not certain you can afford the future you hope to achieve, what can you do to help improve the odds that your retirement is the one you envision?

3. Act now

If you are married, you should resist the inertia and communicate with your spouse about creating, not merely a plan for the two of you, but a plan for the unfortunate possibility that you are likely to live a lot longer than your spouse.

If your spouse handles the bulk of your family’s finances, including investments, it’s time for you to get more involved. At the very least, you need to understand where the assets are and what happens to them in the event you find yourself widowed. (A credentialed fiduciary advisor can help mediate these discussions and provide you with estate planning guidance.)

If you are unmarried, then embrace the fact that the preparation for your financial future falls entirely to you. Never let the potential for embarrassment or the fear of the unknown keep you from making plans or seeking compassionate, professional, credentialed guidance.

A few final things to consider: Allworth is primarily a fee-based fiduciary advisor (your best interests always come first) and we do not sell any proprietary products.

Next, first appointments and assessments are free, and just as importantly, they are actionable (you learn things and get actual guidance that can help you right now).

Lastly, appointments are low key and there is absolutely zero pressure. And if you become a client of Allworth, there are no long-term contracts or obligations, and you can leave or fire us without penalty at any time.

We are one of the fastest growing advisory firms in America. Whether you become a client of Allworth, or another firm, in the strongest possible terms I encourage you to only agree to partner with a fiduciary advisory firm that places your interests ahead of their own 100% of the time.

¹^{Women and Retirement: When They Retire, How They Plan, and Where Help Is Needed (ncoa.org)}

²^{Life Expectancy in the U.S. Dropped for the Second Year in a Row in 2021 (cdc.gov)}

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¹Barron’s 2024 Top 100 RIA Firms. Barron's© magazine is a trademark of Dow Jones L.P. The ranking of independent advisory companies is based on assets managed by the firms, growth, technology spending, succession planning, and other metrics.

² Retention Rate Source: Allworth Internal Data, FY 2022

³ The NBRI Circle of Excellence Award is bestowed upon NBRI clients meeting one or both of the following criteria: Total Company score at or above the 75th percentile of the NBRI ClearPath Benchmarking Database and/or improvement of five (5) or more benchmarking percentiles in Total Company score over the previous survey.

⁴ As of 7/1/2024, Allworth Financial, an SEC registered investment adviser and AW Securities, a registered broker/dealer have approximately $22.5 billion in total assets under management and administration.

⁵ InvestmentNews 2020 and 2021 Best Places to Work for Financial Advisers. The ranking reflects survey responses and scores completed by both employers and employees. Employers report their organization’s workplace policies, practices, and demographics. Employees complete a survey designed to measure the employee experience.

⁶ 2021 Value of an Advisor Study / Russel Investments

⁷ Ranked 9th Top Wealth Managers By Growth in Assets in the U.S. from RIA Channel, 2022. RIA Database and RIA Channel are registered trademarks owned by Labworks, LLC.

⁸USA Today Best Financial Advisory Firms 2024. The ranking is based on the growth of the companies’ assets under management (AUM) over the short and long term and the number of recommendations they received from clients and peers.

⁹NBRI Best in Class Ethics 2023. The Best in Class level is bestowed upon clients performing at or above 90 percentile of the NBRI ClearPath Benchmarking Database.

^✢ Scott Hanson, Investment Advisor 2005, 25 most influential people in the financial services industry. The ranking reflects 25 people who Investment Advisor magazine believes have had or will have the greatest influence on the financial services industry.

^✼Pat McClain, InvestmentNews 2014, Invest in Others Community Service Award, presented to an advisor who has made an outstanding impact on a community through managerial contributions to a non-profit organization.

^†Financial Times, FT 300 Top Registered Investment Advisers, June 2019. The ranking reflects six areas of consideration including the company's years in existence, industry certifications of key employees, AUM, asset growth, SEC compliance record and online accessibility and calculates a numeric score for each company.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.