Prepare not to be surprised. The annual retirement saving and spending survey conducted by the fund company T. Rowe Price found that U.S. women, in aggregate, lag in terms of income and retirement savings compared with their male counterparts. Baby boomer women were the worst off, because so many were stay-at-home mothers or who interrupted their careers to have and take care of children. You might think that this wouldn’t matter, because staying at home enhanced the career opportunities of the husband, but the survey found that for people retired 11 or more years, 45% of the women were divorced or widowed, vs. just 17% of the men.
One very important component of having sufficient retirement income is making Social Security decisions that will maximize the benefit for a surviving spouse. Another is to get help from a professional to assess your situation and options.
What we see that is very common among baby boomer women is that they defer all the financial decision making to the husband which is fine, but women still need to know what is going on and learn so they have the confidence level to assume the financial decisions should it become necessary. Very often widowed women come to us to help sort through their finances after the death of a spouse, and this is a very difficult time and they are afraid to make any decisions. For couples where the man has managed the finances and investments without having a relationship with a financial advisor, this can be particularly difficult. We strongly recommend as you age, you consider working with a financial advisor and developing a relationship with someone you trust that knows your financial situation intimately to make this transition easier for the surviving spouse. Of course, the surviving spouse could be the man, but in so many cases women outlive their spouse and have no financial or investment experience and a relationship with a financial advisor can ease this transition.
What about millennial women? Many younger women have gone into jobs that pay a decent wage but might have limited upside potential. Consider this in your career choices. Start saving early and we recommend you save 15% of your income right off the bat.
Overall, when asked: how much should you be saving for retirement?—more women than men said they did not know, and women tended to offer a lower percentage of their income than men—perhaps due to lower expectations in retirement.