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From 20s to Golden Years: 9 Retirement Planning Tips for Women

From 20s to Golden Years: 9 Retirement Planning Tips for Women

April 08, 2024

Working with women on their retirement planning, at every stage of life, is one of my greatest joys. Women face unique challenges, such as longer life expectancies, career breaks, and lower wages on average. However, with thoughtful planning and dedication, it's entirely possible to meet these challenges head-on and secure peace in your golden years.

Here are nine of the tips I give my female clients and friends.

Begin Planning as Early as Your 20s

Crafting a holistic retirement plan decades in advance allows you to use the power of compounding interest more effectively and offers more opportunities to align your income and expenses with your long-term aims.  Plus, a robust plan can influence major life decisions, from selecting new jobs to deciding on a home purchase versus renting.

That said, it’s never too late to start.

Get Crystal Clear About Your Financial Needs

It’s crucial to accurately assess what those financial needs would look like in your retirement years, compared to your current spending habits, including:

  • Living expenses
  • Healthcare costs, including long-term care
  • Inflation
  • Debts such as mortgages, vehicle loans, and credit card debt
  • Emergency funds
  • Lifestyle goals, such as travel
  • Social Security, passive income, pensions, and investment account drawdowns
  • Taxes (income, property, estate)

And once a plan is created with these elements, it should be revisited annually as your life changes.

Boost Your Financial Literacy

By deepening your knowledge of financial products and strategies, you'll be more confident managing your retirement plan. Diving into books about financial strategies, staying informed about market trends, and learning about ways to reduce your tax liabilities can profoundly help your planning process.

Also, it's essential to keep open and frequent communication with your financial advisor. They should help you understand your financial plans and trade-offs. Feel free to ask them all your questions – no matter how basic or complex.

Maintain Alignment with Your Life Partner

Active involvement in retirement planning is crucial, regardless of which one of you is the primary earner. Opting out of this process can result in confusion and discrepancies in your shared goals, financial habits, and immediate and future income requirements.

To prevent this, it's vital to schedule regular discussions about your retirement plans. These check-ins ensure both partners are aligned and moving together towards a common vision for their retirement.

Maximize Your Contributions

As caregivers, it can be hard to balance the financial needs of others today and your own in the future. However, you’ll want to consider those you provide for now for taking care of you in your golden years.  Preparing for financial independence in your golden years means prioritizing contributions to retirement accounts like 401(k)s and IRAs today.

The U.S. Department of Labor reports that only 43% of working-age women participate in retirement plans1. Maximizing your contributions to these plans is beneficial for several reasons. Not only do these funds benefit from compounding interest over time, but they also provide significant tax advantages during the savings accumulation phase. Additionally, participating in employer match programs is imperative to increasing the total value of your retirement savings, as it’s free money.

Craft Thoughtful Investment Strategies

Diversifying your investment portfolio is a strategic approach to mitigating risks while enhancing the potential for long-term returns. This process extends beyond simply contributing to a 401(k) plan and involves careful choice of various investment types to match your financial objectives, life ambitions, and risk inclinations.

Plan for Career Pauses

Career interruptions, often necessitated by caregiving responsibilities, can have a notable impact on your retirement savings. Adjusting your savings strategy considering these potential breaks can help preserve your financial security.

For example, exploring options like spousal IRAs might be beneficial, enabling non-working spouses to contribute to an IRA, contingent on the working spouse having sufficient income. This approach can ensure growth in your retirement funds, even during times when one of you might not be earning.

Pursue Equitable Employment Opportunities

The gender pay gap is still a hurdle in accumulating retirement savings, with women earning, on average, 83.7% of what men earn2. This disparity underscores the importance of strategic career decisions, especially during the years when you’re building your retirement nest egg.

As you navigate your career, prioritize employers that uphold fair practices, including offering generous parental leave, sufficient paid time off, and equitable advancement opportunities. These can significantly impact your ability to save for retirement, ensuring you're compensated fairly for your contributions and dedication.

Work with a Tax-Intelligent Financial Advisor

Working with a financial advisor can help streamline this process. We offer customized advice to keep your investments, savings, and plans in alignment with your goals. Essentially, a financial advisor simplifies retirement planning, making it an empowering journey.

It’s also critical that your advisor is tax-intelligent, so you can keep more of what you earn. These advisors can help you with tax-efficient investments, tax-free vehicles, and avoiding tax traps.

If you would like help in pursuing your goals and building a balanced financial roadmap as a couple, contact us at Wealthspring. We would be happy to help.


See also:

Roadmap to Retirement: Top IRA Planning Mistakes to Avoid (Webinar recording)

Financial Empowerment: What Women Should Know about Retirement 

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  1. "Women and Retirement Savings," US Department of Labor
  2. "Equal Pay Day: March 12, 2024," US Census Bureau