When it comes to retirement, men and women face many of the same challenges. However, because women have a longer life expectancy and are still struggling with a gender wage gap, planning for an early retirement becomes a different equation altogether. It may come as a surprise to learn that women all around the world tend to retire earlier than their male counterparts.
If you’re a woman and you’re thinking about retiring early, here are some things to keep in mind before you make your big decision.
Women and Retirement: The Retirement Gender Gap
Throughout the world, women consistently retire at younger ages than men. In the U.S., according to a study done by the Organization for Cooperation and Development (OECD), the actual retirement age for women is 66.1, compared to 67.6 for men. Globally, a woman’s retirement age ranges from 59.4 to 73.1, with the same gender gap of one to two years applying in many countries.
One reason that might explain this gap in retirement age could be that, quite often, couples plan to retire around the same time and, on average, women are two to three years younger than their husbands. Another explanation could be that, more often than not, women are the ones responsible for taking care of relatives and they may be timing their retirement around their caretaking duties.
Factors That Impact an Early Retirement for Women
Regardless of the reasons why women may retire earlier, women planning an early retirement need to be deliberate and careful with their plans. Here are a few considerations to keep in mind.
Life Expectancy
If you’re a married woman and you and your husband have plans to combine your wealth during retirement, then outliving your savings may be less concerning. Otherwise, it’s important to keep in mind that women tend to live two to three years longer than men, and it’s not uncommon for women to be widows for 15 years or more. It is important to consider joint savings as a means of funding a longer retirement period.
Savings Shortfalls
Though the gap is closing, women are often the spouse to stay home to raise children. As gender and wage equality have narrowed over the past few years, we are starting to see a shift in this “traditional” dynamic. Nonetheless, even when it comes to taking care of aging parents, women are more often the ones to take care of elder relatives in need. These absences from work put stress on retirement savings, and earnings in general, which could affect Social Security benefits as well as company retirement plans. In fact, studies show that women who end their careers early are most likely leaving the workforce just as their earning potentials are peaking.
Health-Care Costs
Another financial burden to consider is the cost of healthcare, as it’s been shown that healthcare costs disproportionately affect women in retirement. This could be due to the fact that, because women have a longer life expectancy, they also have a higher risk of having longer periods of disability or poor health later in life. It is important to consider all health-care-cost-related details in retirement and how Medicare or employer-subsidized coverage may help fit into a plan.
Female Wealth Planners in Long Island, NY
At Arcadia, we believe in empowering women financially so that they have a clear picture of what retirement might look like. If you’re thinking about retiring and would like help setting up a plan that will support your goals, please contact us today!
