Men and women may not be on equal footing when it comes to investing for the future. Women frequently work fewer years and earn less than men, but they also tend to live longer.¹ Therefore, women must focus on the concerns that are unique to them when planning for retirement.

Obstacles remain: lower pay compounded by fewer working years

Women earn only about 83 cents for every dollar earned by men.² Because they earn less, women may be unable to invest as much as men. In order to make up for other discrepancies in retirement benefits, women may actually need to invest more.

For example, because women often leave work to bring up children or care for elderly relatives, they have fewer total working years. On average, they spend seven years out of the workforce to care for family members.³

This can mean that women qualify for much lower pension benefits or save less in retirement savings accounts. Fewer years in the workforce, fewer years with a single employer, and lower pay are all factors. At the same time, women on average live longer than men, so they must provide for more years in retirement than their male counterparts.

Social security statistics favor men

Women also tend to receive lower Social Security benefits than men.³ Social Security benefits are calculated based on a person's highest 35 years of earnings. If a benefit recipient doesn't have 35 years in the workforce, the Social Security Administration will add zero-earnings years to his or her record to equal 35 years. This will lower the average monthly earnings figure and may result in lower benefits for women who have not worked for a total of 35 years.

Women live longer

Finally, because women generally tend to live longer than men, not only can they expect to spend more years in retirement, but they must consider that a couple's retirement savings may be diminished by health care costs for the spouse who dies first. According to the Social Security Administration, the average life span of a woman today is approximately five years longer than the average man's life span.⁴

Saving more just to catch up

The earnings of women have tended to increase in recent years. This could mean that potentially more investments will be made by women.

Nonetheless, the bottom line is that in order to make up for differences in earnings and benefits, and more retirement years due to longer life spans, women have to invest more to fund their retirement.

What women may need to do

• Carefully consider how much risk you are willing to take in exchange for the potential to earn higher returns. Historically, equity investments have generally provided higher returns over the long term than less-risky investments like money markets and short-term bonds. Keep in mind, however, that equities offer long-term growth potential but may fluctuate more, could incur loss of principal value, and provide less current income than other investments.

• Obtain information about the retirement benefits that are available through your employer, and actively participate in any plans offered.

• Learn about the investment vehicles that can help you reach your retirement goals. Your financial professional is an excellent source of information and guidance to help you sort through the many choices available.

• Contact local professional/trade associations, women's groups, community colleges, and adult education centers in your area for information on investment or personal finance seminars taking place.

• Recognize the unique challenges you may face and start saving and investing as early as possible to overcome them.

It's always a good idea to consult your financial professional before you develop a savings and investment program.

¹ Caregiving Roles and Gender Difference. Journal of Applied Gerontology 2015; The Gender Wage Gap 2014. The Institute for Women’s Policy Research; Twentieth Century Surge of Excess Adult Male Mortality, Proceedings of the National Academy of Sciences, July 2015.
² U.S. Census Bureau, median earnings, 2016.
³ Social Security Administration, 2015.
⁴ Centers for Disease Control and Prevention, 2016.