5 Reasons Women Are Pessimistic About Their Retirement Outlook

 In Retirement

retirement outlook

It’s perfectly natural to be concerned about your retirement outlook.

After all, so much rides on whether or not you set enough aside by the time you quit working full-time. If you fail to do so, you’ll either need to put off retirement or modify how you plan on spending your Golden Years.

That being said, retirement planning is especially challenging for women. Most people misjudge how much they need to retire, but women have a number of other challenges to contend with on top of that. Below are five of the most important you must address in order to improve your retirement outlook.

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Women Don’t Make as Much as Men

I’ve always recommended that 20% of your paycheck should go toward retirement. That being said, this amount tends to be a lot more for men than for women.

Matt Sommer, vice president/director, Retirement Strategy Group at Janus Capital Group pointed this out when he talked about the retirement outlook most women face:

“However, women continue to face significant economic challenges, most notably with the pay gap: In 2015, women earned just 80 percent of what men were paid. Earning less leads to a lower level of future Social Security benefits. In 2012, women over 65 received $12,520 in average Social Security income compared to $16,398 for men.”

This brings up a very good but often overlooked point where the pay gap is concerned. Not only do women bring less pay home, on average, but this means less is going toward their Social Security, too.

Women Live Longer Than Men

Another fact that rarely gets brought up when we talk about the retirement outlook for women is that they tend to live longer than their male counterparts. Obviously, this is important. It means women must save more to ensure they have the funds to live out their life after they no longer draw a regular paycheck.

Now, some of you may have noticed the other problem with this. As we just discussed, women also make less, on average. So they have less money to pay for more retirement.

While women living longer than men may not seem like bad news for them at first, it does when it comes to their retirement outlook.

Also, this is not some insignificant amount. Here’s another quote from that CNBC article we linked to earlier:

“Women need more retirement funds. Those who reached age 65 in 2012 are expected to live, on average, an additional 20.5 years.”

That’s a lot of extra years to save for.

Women Spend Less Time in the Workforce

Making matters even worse for women is that females spend less time in the workforce. This is true for both full- and part-time workers.

The main reason given for this discrepancy is the time women must take off because of pregnancy. Of course, after birth, many women take off work to raise their children. Women are also more likely to be the ones to set their careers aside in order to take care of their elderly parents.

In fact, when surveyed, 44% of women said family obligations were behind their taking an extended period of time off from work.

Keep in mind, too, this even extends to women with higher levels of education. For example, in 2014, a Pew Research Center found that 9% of women with at least a master’s degree had left the workforce to look after their kids.

Again, as I mentioned above, the consequence isn’t just taking home less pay. It means 401(k)s suffer, too. Many companies require that you remain working for a certain period of time if you’re going to maintain employer contributions to these important retirement accounts.

This could also affect what kinds of benefits they receive, a major problem for women who don’t have a spouse’s plan to fall back on. Paying out of pocket definitely cuts into what women can set aside for retirement.

retirement accounts 401K IRA

Women Tend to Be More Risk Averse

Just like the fact that women live longer than men, this seemingly positive trait actually does more harm than good when it comes to their retirement outlook.


The same behavior that leads to women getting fewer speeding tickets also keeps them from investing in stocks because of their perceived risks. Instead, women seem to prefer CDs, which are far safer. They’re actually all but guaranteed to offer the returns they’re supposed to.

Unfortunately, these modest returns aren’t great for retirement planning. Sure, they provide a predictable stream of income, but over time, it really doesn’t add up to much.

Even when women do invest in stocks, their behavior is noticeably different than that of their male counterparts. As just one example, on average, men make 45% more trades than women. That is a very significant number.

The Matter of Education

Although more and more women are earning college degrees and post-graduate credentials, many of them fall behind men when it comes to understanding the ins and outs of saving for retirement.

There could be any number of reasons for this, but one of them is simply cultural. For generations, men have been expected to handle the family’s finances, even when a woman brought home her own income. It’s largely been up to the man to decide what the money will be put toward.

As a result, many women have found themselves unsure of what to do after a divorce or the death of their husband. All of a sudden, they need to make some pretty serious decisions about their financial futures. Obviously, this includes retirement. When you consider all the challenges we’ve already covered, a lack of financial literacy becomes a huge problem that could keep a woman from hitting her retirement goals.

Study after study has shown women aren’t optimistic about retirement. Whether it’s having enough to retire or retiring on time, a large percentage of them have their doubts. It’s easy to see why.

However, it doesn’t have to be this way. Plenty of women have overcome these odds and lived out their Golden Years with a solid nest egg providing for them. Now that you understand the challenges, you can begin to surmount them.

saving for retirement

Sergey Sanko
Sergey had started an IncomeClub after years of being an investment advisor for high affluent investors and managing fixed income securities. He is the lead investment advisor representative and holds a Series 65 license. Sergey earned his Executive MBA degree from Antwerp Management School.
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