Four Obstacles in a Woman’s Path to a Financially Secure Retirement

Pamela Kweller RSSA Staff


On March 8, 2021 we observed International Women’s Day and celebrated the many contributions and achievements of all women. And while women have been able to overcome the countless challenges and inequalities in order to achieve success – it is important to remember that they are still faced with more obstacles today.

When it comes to financial security, women tend to face more hardships than men.

Preparing for retirement and attaining financial security is no easy task for anyone, but let’s consider the obstacles women face and how they can overcome them.

Less time working

Women are more likely than men to spend time outside of the workforce. This could be due to parental leave or being a caregiver for an older family member. Women are also more likely to work part-time than men.

Individuals must earn a minimum of 40 Quarters of Credit (10 years of work) to qualify for Social Security benefits. Social Security benefits are not only calculated based on an individual’s earnings, but specifically their highest 35 years of earnings. Some women work less than the required 10 years resulting in earning no benefit at all. While other women work more than 10 years, but less than 35 years and each year that has no earnings will negatively impact the Social Security benefit she receives in the future.

Additionally, when a woman is no longer employed, she is likely no longer saving for retirement. Many employers offer retirement savings plans such as a 401(k) and when a woman leaves her job, the employer is no longer contributing to the plan and the woman may not be saving on her own.

If women spend less time working than their male counterparts, they will not be able to prepare for retirement as well or achieve the same level of financial security.

Less pay

It is no secret that there is a pay gap between men and women. And while things have improved greatly over time, women are still paid less than men.

Overall, women tend to earn less money than men. How much less exactly? In 2019, it was reported that women earn 79 cents for every dollar that a man makes. It has also been found that a woman’s peak earning age is approximately 9 years younger than a man’s peak earning age.

Social Security benefits are calculated based on an individual’s earnings and therefore, the less money a woman makes, the less Social Security benefits she will receive.

Longer life expectancy

There are close to 6 million more women at age 65 than men. And these women have longer life expectancies than men. In 2018, the Social Security Administration found that women age 65 were expected to live, on average, 21.4 more years and men age 65 were expected, on average, to live 18.9 more years.

When a woman lives longer, she needs more money. There are many associated costs with growing older and living longer including potential healthcare and living expenses. As a result of living longer, women are more likely to outlive their expenses.

The current health crisis

The COVID-19 pandemic has had a disproportionately negative impact on women than on men when it comes to job security. Data released back in December 2020 revealed that women had lost 156,000 jobs in December while men gained 16,000.

Women may face extra challenges to achieve financial security, but there are plenty of things they can do to combat these challenges.

Here are a few things women can do:

1. Start saving! And if you already have started saving, save more.

2. Prepare for the unexpected. Many people say 3-6 months worth of your expenses is a good emergency fund, but the current health crisis has caused people to realize they may need more than that. Prepare for a forced early retirement, a personal health problem, or a global health program.

3. Don’t be afraid to invest and plan on your own. Gather a group of friends, like a book club, and support each other as you talk about your investments. You can do this virtually with friends and may be the perfect social activity during the pandemic.

4. Learn about Social Security and start planning for your retirement now. There are over 2,700 Social Security rules and they have an impact on the benefits you will receive. Be sure you get all the money you are entitled to by educating yourself and/or working with a professional, like a Registered Social Security Analyst (RSSA) who can support you in making the optimal claiming decision for your particular situation.