Retirement should be an enjoyable phase of life, but many women have financial anxiety attached to this milestone. A new GOBankingRates survey found that more than 1 in 3 women (38%) fears that she has not saved enough money for retirement and that she will outlive her savings. Meanwhile, only 28% of men have this same fear.
There are a number of factors — both psychological and mathematical — that explain why women fear they will run out of retirement savings. One reason is that the longer you live, the more money you will need in retirement, so generally speaking, women will need more money to fund their retirement than men do.
Although women need more money to retire, they typically have less saved than their male counterparts. One reason is how women utilize the money they are putting aside for the future. Typically, women are more risk-averse than men are. And so even if they’re saving for retirement, are they saving it or are they investing it? Because there is a difference. Men are typically more aggressive in terms of their investments. Women tend to be more conservative. So if you have a woman who is saving the same amount of dollars as a man, if she’s only earning interest on that, or if it’s in a portfolio that’s only earning 3% or 4%, and you have a man earning 6% or 7% on average, those balances are going to be significantly different, even over 10 years.
Another factor leading to less retirement savings for women is that women, on average, earn less than men. Even if you’re saving the same percentage, it doesn’t equate to the same amount of dollars, so that’s definitely one thing that has to be addressed. Women’s fear of not saving enough may be part of a larger fear of managing their money.
Working with an advisor and creating a plan that is tailored to a woman really makes sense. Even if you’re maxing out your 401(k) or IRA, how do you know if that’s going to be enough without working with somebody who can run the projections, who can create a plan for you, who can help you execute it and let you know if you’re on track or not? Having a professional on your side can help assuage any retirement-related money fears.