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Retirement planning can feel like learning a foreign language. There's an alphabet soup of acronyms—401(k)s, IRAs, RMDs—and everyone seems to assume you already know what they mean.
But here's what makes it harder for women: The traditional retirement planning model was built around a career path that many women don't follow. Career breaks for caregiving, longer lifespans, lower lifetime earnings—these realities aren't always factored into standard retirement advice.
So what questions should you actually be asking? Here are the ones that matter most.
How Much Do I Really Need to Retire?
The old rule of thumb says you need 70-80% of your pre-retirement income. But that's too simplistic, especially for women.
A better question: What lifestyle do I want in retirement, and what will it cost?
Consider that women live an average of five years longer than men, which means your retirement savings need to last longer.[1] Healthcare costs in those later years can be substantial. Many women also continue to provide financial support to family members during retirement.
Start by tracking your current spending, then think about what changes in retirement. Will you travel more? Downsize your home? Have ongoing medical expenses?
Am I Saving Enough Now?
This depends entirely on your timeline and your goals, but here's a useful benchmark: By age 40, aim to have three times your annual salary saved. By 50, six times. By 60, eight times.[2]
If you're behind, don't panic—but do take action. Every year you delay saving costs you compounding growth. Even small increases in your savings rate make a significant difference over time.
What Impact Did Career Breaks Have on My Retirement?
Career interruptions—whether for raising children, caring for aging parents, or other reasons—affect retirement in multiple ways:
Lower Social Security benefits. Social Security calculates your benefit based on your 35 highest-earning years. Years with no income or reduced income pull that average down.
Less employer retirement match. If you weren't working, you weren't receiving employer 401(k) contributions.
Lost compound growth. The money you didn't save in those years missed out on decades of compounding returns.
A woman who takes five years out of the workforce can face a 20% reduction in lifetime earnings and retirement savings.[3] That's a real gap that requires intentional planning to address.
Ask your financial planner to quantify this impact for your situation and discuss catch-up strategies.
Should I Be Using Catch-Up Contributions?
If you're 50 or older, you can contribute extra to your retirement accounts:
- 401(k): $7,500 additional per year (2024)
- IRA: $1,000 additional per year (2024)
These catch-up contributions are specifically designed to help people who are behind on retirement savings. If you have the cash flow to maximize them, they're one of the most powerful tools available.
How Will Divorce or Widowhood Affect My Retirement?
Life transitions dramatically change retirement planning. If you're divorced, you may be entitled to a portion of your ex-spouse's Social Security benefits (if you were married at least 10 years and haven't remarried). You're also entitled to a fair share of retirement accounts accumulated during the marriage, typically divided through a QDRO.
If you're widowed, you can claim your late spouse's Social Security benefit if it's higher than your own. Understanding these rules can significantly impact your retirement income.[4]
What's My Social Security Strategy?
Social Security is particularly important for women because you're more likely to live into your 80s and 90s, when other assets may be depleted.
Key questions:
- When should I claim? You can start as early as 62, but your benefit will be permanently reduced. Waiting until age 70 maximizes your monthly benefit.
- Should I claim on my own record or my spouse's? You're entitled to the higher of your own benefit or 50% of your spouse's (at your full retirement age).
- How do survivor benefits work? If your spouse dies, you can switch to their benefit if it's higher.
This decision has lifetime implications. It's worth modeling different claiming strategies with a financial advisor.
Am I Invested Appropriately?
Women tend to be more conservative investors, which seems prudent but can actually be a problem. Being too conservative means your money doesn't grow enough to keep pace with inflation over a 25-30 year retirement.
Ask: Does my investment allocation match my time horizon and risk tolerance?
If you won't retire for 20 years, you can weather market volatility and should have significant stock exposure. As you approach retirement, gradually shift to a more conservative mix—but don't abandon stocks entirely. You still need growth.
What About Healthcare Costs?
Healthcare is one of the biggest retirement expenses, and women typically spend more on healthcare than men due to longer lifespans.
Important questions:
- What will Medicare cover? Medicare starts at 65, but it doesn't cover everything. You'll need supplemental insurance and a plan for out-of-pocket costs.
- Should I open an HSA? If you have a high-deductible health plan, a Health Savings Account offers triple tax benefits and can be a powerful retirement healthcare fund.
- What about long-term care? Women are more likely to need long-term care, and it's expensive. Do you need long-term care insurance, or can you self-fund?
Do I Have Adequate Insurance?
Life insurance, disability insurance, and long-term care insurance aren't glamorous, but they protect your retirement plan from being derailed by unexpected events.
If others depend on your income, you need life insurance. If you couldn't maintain your lifestyle if you became disabled, you need disability insurance. And if you don't have substantial assets to self-fund long-term care, that insurance may be worth exploring.
What's My Estate Plan?
Retirement planning and estate planning overlap. You need:
- A will specifying how assets are distributed
- Beneficiary designations on all retirement accounts (these override your will)
- Powers of attorney for financial and healthcare decisions if you become incapacitated
These documents ensure your wishes are followed and make things easier for your loved ones.
Where Do I Start?
The most important question might be: Do I have a financial advisor who understands my specific situation as a woman?
Retirement planning for women isn't just regular retirement planning with pink charts. It requires addressing the wage gap, career interruptions, longer lifespans, and different risk tolerances and priorities.
A financial planner who specializes in working with women can help you build a retirement strategy that accounts for all of these factors—and gives you confidence that you're on track for the retirement you envision.
This content is for educational purposes only and does not constitute financial advice. Consult with a qualified financial advisor regarding your specific retirement planning needs.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a registered investment advisor and separate entity from LPL Financial.
Chesapeake Financial Planners | 2402 Scotlon Ct, Forest Hill, MD 21050 | (410) 652-7868 | www.chesapeakefp.com