45% of Women Worry About Outliving Their Savings. Here's How to Build a Large Enough Nest Egg to Make That Less Likely

Since women have traditionally earned less money than men have, it's not particularly shocking to learn that they have less retirement confidence than men do. That's according to a late 2023 report by Northwestern Mutual. However, women's biggest retirement concerns align closely with those of men. And for 45% of women, outliving savings is a major source of stress.

If you're worried about running out of money in retirement, you should know that the more savings you start off with, the less likely you may be to end up depleting your cash reserves. So with that in mind, it's important to commit to saving for retirement from the beginning of your career through the end of it.

There's strength in higher numbers

Let's get one thing out of the way. Unfortunately, no single savings target guarantees you won't run out of money in retirement. The risk of depleting your nest egg will hinge largely on how well (or not) you manage your savings once you're retired.

If you withdraw from your nest egg at random rather than crunch numbers and establish a safe withdrawal rate, then you might deplete a $2 million individual retirement account (IRA) faster than another person uses up a $500,000 savings balance.

But generally speaking, it's fair to say that if you enter retirement with $2 million, you have a greater chance of not running out of money than someone with just one-fourth of that amount. So it's in your best interest to try to save as much as possible.

Slow and steady could yield great results

One challenge women might have in particular with retirement savings is finding the money to sock away. As mentioned, women tend to be paid less than men, which can make it harder to save. But if you want to retire with a nice pile of money, you really need to do two things:

1. Save for retirement regularly throughout your career
2. Invest your savings in the stock market for strong returns

Many people don't start saving for retirement until they're well into their 30s or 40s -- sometimes beyond. But if you want to build up a nice nest egg, a much better bet is to start contributing to a retirement account in your 20s, once you're earning a steady paycheck.

What's more, while investing in stocks does carry risk, and you're certainly not guaranteed to make money in stocks, history has shown that people who stick with the stock market for decades have a tendency to make money -- and sometimes, lots of it.

The stock market's average annual return over the past 50 years has been 10%. If you're able to snag a return like that in your portfolio, then you may find that modest monthly contributions to a retirement plan go a long way over time.

Let's say you're able to get that 10% return in your IRA or 401(k), and you contribute $400 a month between ages 25 and 65. After 40 years, you'll have a balance of over $2.1 million. And while there's always a chance of a sum that large running out on you in retirement, if you're careful with your withdrawals, there's an even stronger chance that your money will last as long as you need it to.

It's natural to worry about outliving your savings in retirement. But the more money you bring in, the less of a concern that might be.

At the same time, though, plan to sit down with a financial advisor ahead of retirement to establish a smart withdrawal plan for your savings based on factors like market conditions and how your nest egg is invested. That could give you even more confidence in your ability to avoid depleting your savings in your lifetime.