Why Women Need To Plan For Retirement Right Now

Here at Untangle Money, we can't stress enough how important it is for women to plan for their financial future - especially their retirement. There is no better time to start than the present so today we are here to remind you why and how to plan for your retirement right now!

So why do women need to plan for retirement right now?

Well, let's start out with these 5 Reasons Why Retirement is Harder For Women:

1. Women are more likely to work part-time, and part-time jobs are less likely to offer retirement plans.

2. Women tend to take more time off work to care for others (maternity leave, elder-care, etc.); in fact, men work an average of 38 years, whereas women work an average of 29 years (in the paid workforce). Time away from paid work can mean less of an opportunity to save for future needs.

3. Women live longer than men, which means they need to have a sufficient retirement nest egg for themselves. As of 2018, the life expectancy in Canada for women is 84.1, for men it's 79.9.

4. Older women are more likely to live in poverty. Based on the last point, women are typically retired for longer than men but with fewer assets. In the US, women 65+ are 43% more likely to live on an income below the poverty level; and 65% of the elderly poor are women. In Canada, 41.5% of single women over 65 live below the poverty line.

5. Too few women save for their retirement. Don't be misled though. Few women save for retirement because there is a lack of proper education on retirement planning and women are never informed on how early they need to start.

Continuing with reason number 5, because women earn less money over the course of their lifetime (women's salaries peak at 40, men's salaries peak at 55), it's much harder for a woman to start retirement planning at 40 than for a man to do the same. Women lack the extra $10,000-$20,000 per year that a man has (which is $150,000-$300,000) to put towards retirement investments. Lower lifetime earnings lead to lower retirement wealth.

Overall, women tend to go into careers that pay us less; the wage gap means we earn less for equal work; and our incomes are more likely than men's to fluctuate. Not to mention the Pink Tax and that we pay more for goods and services (like personal care services: hair, grooming, etc.). These are all factors that play into why it is harder for women to retire financially secure, and why we need to start planning as early as possible.

Here at Untangle Money, we believe it's never too early to start retirement planning and we strongly urge you to start as soon as possible. Women's financial lives are significantly different than men's, so the earlier you contribute to your retirement, the more likely you'll be to meet your retirement goals. So let's dive into how you can get started with planning for your retirement right now!

How to start planning for retirement right now!

Invest your savings!

We've said it before and we'll say it again: invest, invest, invest! Women are great savers but we let that money sit and don't invest those savings - this makes it harder to reach our retirement goals. So they best thing you can do for your retirement planning is start investing as soon as possible. Invest more of what you save and invest more of that money into stocks rather than bonds. The way we hear investment advice leads many to think that women are more risk-averse than men, but if you look at the numbers, there is more of a difference in risk-tolerance within genders than between genders.

If you want to read more about investing and how it can help you reach your retirement goals, checkout our post: The Time Value of Money & Why You Should Invest!

Sisterly advice: Start right now! Women's salaries tend to peak much earlier than men's (in and around 40), so unlike men, there may not be enough high salary years to make waiting worth it. If you are earning less than $50,000/year then we recommend prioritizing your TFSA, otherwise, you may want to invest in your RRSPs. Also, research shows that women need to max out all of the tax-sheltered account room available to them in order to save enough for retirement.

Have a financial plan!

We have a whole blog post on the financial planning process, so we won't get into too much detail here. The main function of a financial plan is to figure out where you stand currently with your personal finances, and where you want to stand in the future, all while hopefully easing any stress about your finances. Having a financial plan can help you with retirement planning because it creates a series of steps that outline how best to manage your money and how to achieve your financial goals (like retirement).

Aside from getting started right now with your own retirement planning, you should also talk about retirement with the women in your life! Seriously! A major barrier is the fact that women have been conditioned to not talk about money and personal finances. But one of the best ways to learn and stay informed is to have open conversations with the women in your life about these topics - especially retirement. Make sure the women in your life know the why and how we mentioned above so they can be on track for their retirement goals.

What’s next?

You can follow us over on Instagram, Facebook, Pinterest and LinkedIn to see more content about women and money, personal finances and planning for your financial future. You can also check out our other blog posts here!

Financial independence is a huge part of being a strong, independent person, and it is our mission to help women, and anyone who doesn't feel safe or welcome in financial spaces typically dominated by cis men, set themselves up for financial success.

At Untangle Money we help women understand their (real!) financial picture, and obtain financial guidance from people that actually, really, get it; this is why we offer affordable options so that we are accessible to everyone. We would love to help you, too! Join the community of hundreds of other women looking to strengthen their financial well-being. You can check out our products and plans here or get in touch for a free consultation!