Women and their Retirement Savings

COS_09Women have a number of issues when it comes to their saving for their retirement.

Points you may have read before, and I reiterate them ahead of what appears to be good news for some:

  • Fewer women save as compared to the number of men
  • Those who do save are overly fearful and risk averse
    • They save too conservatively and miss potential returns
  • They work fewer years which presents challenges to the need to save more with less time to do so
    • Due to caregiving for children and/or elderly parents
  • Longevity of women is longer than men
    • Need to save more for those extra years of life relative to men.
    • They start too late in life
    • Lose out on the benefits from compounding that happens during those later years of saving; years they won’t have because of starting their savings late

And according to the source article* for this blog summary, there is good news in that the millennial (birth years between early 1980’s and early 2000’s)  women seem to have learned, have a better grasp of their finances, and are starting earlier and are willing to accept greater risk. My thought on this point is that they also tend to have children later in life as compared to earlier generations so it remains to be seen if they’ll continue to save well in the future. This said, it is still good news because those early years of saving will have more time to grow and compound even if they end up not saving as much later in life. Of course consistent saving of some amount would be preferred if possible.

One key to feeling more comfortable with taking on a little more risk, is understanding how to structure investments so one may be unlikely to lose it all at once (i.,e., evidence based investing through an indexed approach).

*Women lagging in retirement saving: Survey by Shelly Schwartz, special to CNBC.com

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