- Certain financial shocks may hurt women’s financial preparedness before and during retirement.
- Experts say that points to the need for preemptive planning that addresses tough questions.
- Half of women said they are behind on retirement savings, versus just 35% of men, according to a 2022 Goldman Sachs report.
Many women already feel they are behind when it comes to being financially prepared for retirement.
There’s another risk they have to watch for: disruptive curveballs life throws at them that may put them off track, according to recent research from financial services firm Edward Jones and aging research provider Age Wave. A majority of female retirees, 81%, have experienced at least one such unexpected financial event, versus 69% of men.
The most common curveball for both sexes is having a spouse or partner pass away, with 77%. Women are almost twice as likely to be widowed, according to the research.
Retired women are also more likely to face other shocks, including the death of another family member or close friend, suffering a financial setback or becoming a caregiver.
Caregiving tends to be a significant setback for women. A majority of women said becoming a caregiver was a life-destroying event both from a financial and life standpoint, according to Lena Haas, head of wealth management advice and solutions at Edward Jones.
“Women are less prepared to begin with for retirement,” Haas said, adding they “are hit with curveballs more frequently and they’re less equipped to make adjustments.”
Women are more likely to be caregivers for family
Moreover, a majority of unpaid family caregivers are women. Family caregivers provided an estimated 36 billion hours in unpaid care in 2021, according to AARP, amounting to work worth $600 billion.
The caregiving dilemma does not only affect retired women.
“It’s hitting us during working years, too,” said Heather Ettinger, chairwoman of Fairport Wealth in Cleveland, Ohio.
As baby boomers age, with about 10,000 turning 65 every day, that often puts pressure on their children to take on caretaking roles, Ettinger noted. Women are more likely to take on those responsibilities when they may not have enough saved for their own retirement, she said.
Half of women said they are behind on retirement savings, versus just 35% of men, according to a 2022 Goldman Sachs report.
Caregiving can affect women’s ability to save if it takes them out of the workforce. Less work hours may also reduce the amount of Social Security benefits they qualify for in retirement.
How to mitigate the effect of financial curveballs
Women also contend with unique challenges when it comes to retirement planning, such as lower pay, longer life expectancies and more time out of the workforce compared to men.
Professional financial help can mitigate the effects of the potential surprises women face.
Sitting down with a financial advisor can help identify important questions that should be asked, Haas said.
Examples of such questions include: Do you and your family members have life insurance or long-term care insurance? If you become a caregiver, will you still be able to work? Do you have an emergency fund?
Moreover, women may be able to find information on what is available to them from their employer’s benefits department, Ettinger suggested.
“So many families don’t want to talk about money,” Ettinger said.
Addressing that will require both women and their families and the financial professionals with whom they work to address tough questions, including who will provide care and how when a loved one gets sick.
“A big retirement curveball is we’re not getting there early enough to help people prepare,” Ettinger said.
