Here's the good news for women in or approaching retirement: Women tend to outlive men, which means that, if you're of the female persuasion, you probably have a few extra years of Bingo nights and mahjong tournaments to look forward to. The bad news, however, is that if you're a woman, you're more likely to struggle financially in retirement than a similarly situated male.
The National Center for Women and Retirement Research reports that as many as nine out of 10 women will become solely responsible for their finances at some point in life. But with so many women coming into retirement at a huge disadvantage, keeping up with costs can be a significant challenge.
Why women struggle to save
It's common knowledge that women, on average, earn only $0.77 for every dollar earned by their male counterparts, which puts them at an automatic handicap when it comes to savings. According to a survey by the Society of Actuaries and the Women's Institute for a Secure Retirement, women tend to have less savings than men overall.
Women also tend to rely more heavily on Social Security benefits for retirement income than males. Worse yet, women are less likely to work at companies offering sponsored retirement plans, which means they have fewer opportunities to take advantage of tax-deferred savings.
Additionally, though men and women tend to retire around the same age, women often enter retirement with fewer full-time working years under their belts. Only 26% of female retirees say they've worked full-time for at least 40 years, while 45% of male retirees have put in 40 years or more in the workforce.
And while stay-at-home fatherhood is slowly becoming less of a trend and more of a social fact of life, women are still more likely to take time off from their careers to provide full-time care for their children. Of course, less time spent in the working world translates to fewer pension and Social Security benefits, which can be a huge blow during retirement in the absence of a remarkable 401(k) or IRA balance.
At least women have their priorities straight
There's a silver lining to all of this: When it comes to sound retirement planning, women are actually doing a much better job than men. In fact, women are more likely than men to take advantage of their employers' retirement plans.
According to Vanguard's "How America Saves 2015" report, in 2014, 81% of women earning $50,000 to $74,999 participated in employer-sponsored plans, whereas only 62% of men in a similar income range did the same. And among those earning $100,000 or more, 91% of women participated in employer retirement plans, as compared to just 87% of men. In fact, women outsave men across all income levels.
Fidelity Investments also reports that women tend to make better investment decisions than men. Women are more likely to do their research, ask professionals for help, and stick to an investing plan. A study by Fidelity confirms that 43% of women feel they haven't made any financial mistakes, whereas only 33% of men make similar claims. Furthermore, women tend to have more balanced portfolios than men and, most impressively, manage to secure a more favorable rate of return than men while limiting their exposure to risk.
It's also clear that women, as a whole, have some pretty solid money-management skills. Fidelity reports that many women make most of the financial decisions in their households and are more comfortable discussing finances with their adult children than their husbands are.
Getting women on track
Having less money in retirement is a major concern for women. For many, longer life expectancies can mean extended periods of widowhood and a resulting decline in their standard of living. Those who outlive their spouses run the risk of depleting their financial resources so that by the time they need their own care, they're unable to fund it. These days, a couple retiring at age 65 can expect to spend $220,000, on average, for healthcare costs in retirement -- and that doesn't even include long-term care expenditures, such as assisted-living facilities or nursing homes.
But it's not all bleak. As a woman, you can make several moves to avoid being cash-strapped during retirement, the most essential of which is to begin saving early. If you're eligible for an employer-sponsored retirement plan, participate, and be sure to take advantage of whatever matching incentives your company offers.
Next, get aggressive if time is on your side. We've already learned that women excel at doing their research. Consider a riskier blend of investments to generate a higher return. This will help your portfolio grow faster over time, especially given that your earliest retirement-savings contributions will likely be the smallest. Finally, be sure to take advantage of catch-up 401(k) or IRA contributions if you're closer to retirement and have the means to ramp up your tax-deferred savings.
Of course, there's also the option of postponing retirement until your finances paint a prettier picture. Working even one extra year could help bridge the gap between the amount you'll need to live comfortably and the potentially disappointing figure you're currently looking at.