Retirement Planning for Women Can Be Harder: Here’s How To Do It
Written by
Cynthia Measom
Edited by
Joe Evans
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Women differ from men in countless ways, including how they plan for retirement.
GOBankingRates interviewed Regina McCann Hess, CFP, certified divorce financial analyst and author of Super Woman Wealth: How To Become Your Own Financial Hero, to get her take on women and their retirement planning goals.
Hess, who has more than two decades of financial planning experience, has dedicated her career to empowering professional women to take an active role in their finances — nurturing their money, protecting their wealth and taking control of their financial future. She understands women’s unique relationships with money and routinely offers practical advice to women on becoming more comfortable with financial planning and management.
Here are her insights regarding challenges women face while trying to meet retirement savings goals and what they can do about it.
Challenges Women Face Meeting Retirement Savings Goals
From caring for others to not making themselves a priority, here are some of the main challenges women face when trying to meet their retirement savings goals.
Caregiving Responsibilities
“Most women lose several years of contributing to their retirement plans due to taking time off work to care for their families,” said Hess. “On average, women lose 12 years of work — and contributions to their retirement plans — while stepping away from work for caregiving responsibilities.”
Hess said women taking time off isn’t only time to care for their children; they also take time off to care for older family members experiencing health issues.
“This has a direct impact on their retirement goals,” said Hess. “Not only do they miss making retirement plan contributions, [but they also] miss promotions and raises that could help them get closer to their goals.”
Gender Wage Gap
Another challenge is the difference in the amount of money women make versus men. The Center for American Progress found that in 2021, women who worked full-time typically earned over $9,000 less per year than their male counterparts.
Hess pointed out that in general, women still make only $0.82 for every $1 their male counterparts do, which, she said, puts women behind from the get-go.
“The even sadder part is that this amount has essentially not changed in years,” Hess said. “Making less means that women have less to use for their budgetary needs. When faced with paying their rent or saving for retirement, their day-to-day needs must come first.”
Putting Themselves Last
Hess said another challenging issue that is rarely discussed is that women tend to put themselves last.
“We get up in the morning, take care of our families, go to work and take care of our responsibilities there, then come home and end the day caring for our families again,” she said. “There is little energy or time left for ourselves. We tend to be so focused on everyone around us yet don’t pay attention to our own needs. Essentially, we need to listen to the flight attendants’ message about putting the oxygen mask on ourselves before helping others. The translation for that is that we need to listen to our needs and focus on our own health, wealth and well-being.”
How Women Can Take Charge and Reach Retirement Goals
Here are Hess’s practical tips for taking charge and reaching your retirement goals.
Pay Yourself First
“I believe in practicing what you preach,” Hess said. “I champion the idea of paying yourself first. Otherwise, it is too easy to fall into the trap of forgetting about your own needs.”
Hess said she encourages her clients, friends and family to make contributions to their employer retirement plan as a foundation for saving for their retirement.
“Ideally, the goal is to max out the annual contributions allowed,” she explained. For some, this is a high bar. In those instances, we discuss an amount that is feasible for their budget. But, we don’t stop there. We then develop a plan to continually increase contributions as we move forward.”
Opt for Automatic Annual Increases
Hess said one of the easiest ways to increase your retirement plan contributions is to sign up for automatic annual increases in your contributions. She said that the increases take place every January.
Follow Hess’s ‘One-Third Rule’
“Another great way to increase your contributions is to follow my one-third rule,” said Hess. “When you get a raise, put a third of it towards your retirement savings, another third to your rainy day fund, and the remaining third towards your lifestyle or budget needs. I like this approach because it is hard to take money out of your pocket but this money hasn’t hit your pocket yet. You are not used to spending it yet. This makes it easier to commit a portion of your raises towards your retirement goals.”
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