Women and the Retirement Ripple Effect

By Pamela J. Sams, CRPC
NABBW’s Retirement Planning for Women Expert

Women today are an integral part of our economy and key financial decision-makers in their families. In the last 40 years, women\’s incomes have risen more than 60% according to the U.S. Bureau of Labor Statistics and women control 51% of the private wealth in America¹.

Despite this influence, there are certain factors distinct to women that create challenging retirement realities for them. As a group, lower wages on average and more time spent out of the workforce than men not only reduces women\’s earning and savings potential, but it also results in lower Social Security benefits. These factors create an unfortunate ripple effect impacting retirement savings and security.

With the current shifting Social Security landscape, all Americans need help navigating the complexity and pitfalls of planning for retirement. This is especially true for women of all ages and stages – married, divorced, single, mothers, Baby Boomers, young professionals – yet too often, women leave retirement planning to chance. A recent analysis of U.S. Census data found that 60% of women age 65+ who live alone or with a spouse have incomes insufficient to cover basic daily expenses.

Mind the Gap

Working women continue to save significantly less for retirement than their male counterparts. A recent study by the ING Retirement Research Institute found that a woman\’s total retirement assets, both in and out of the workplace, averaged less than 70% of a man\’s comparable savings.

The ING study found that women have $40,000 less saved for retirement than men on average, a striking $149,000 for men compared to 108,000 for women in total savings. For women with children under the age of 18 at home, this retirement savings figure dropped even further to $88,000.

Life insurance coverage, a critical component of long-term financial and retirement security, is another area where women fall behind their male counterparts. ING\’s study found that women purchased an average of only about three times their salary in life insurance, compared to men who had average policy coverage of approximately four times their salary.

In addition, only 39% of mothers have life insurance equal to four or more times their salary, compared to 54% of fathers. While every couple\’s insurance needs are different, the unfortunate death of a spouse can quickly drain a family\’s hard-earned savings. Evaluating lifestyle needs and securing enough insurance coverage for each partner is an essential way that women can help protect their families and preserve valuable retirement assets.

Women\’s Longevity: A Good Challenge

The average lifespan for both men and women has been expanding due to advances in healthcare and medicine, and experts predict it will continue to increase. Data shows that women, on average, can expect to live five years longer than men. Longevity trends and healthcare concerns magnify the need for women to prepare themselves for retirement.

A woman\’s longer lifespan means they face a greater number of their retirement years alone. Accordingly, women are more likely to need greater financial resources to provide for the rising costs associated with healthcare needs as they age. Women need to take responsibility and control of their retirement. For couples, women need to be sure they have a seat at the table in discussing and planning for retirement.

Here are three tips for women to get their retirement on track.

Tip #1: Develop a comprehensive financial plan.

The plan should focus on building a sufficient retirement nest egg, but it should also include strategies to create a steady stream of income for life after your last paycheck is collected. ING\’s study found that fewer women (25%) than men (33%) reported having a formal investment plan for retirement and that more women (42%) than men (31%) said that they did not know how to achieve their retirement goals.

Tip #2: Be diligent and aggressive in your retirement savings goals.

Find every opportunity to save for retirement. Take advantage of and actively contribute to your employer-sponsored retirement plan. If possible, contribute at the maximum annual levels allowed or contribute at least enough to fully take advantage of any employer matching benefits. Build in retirement savings growth as your income grows, increasing your retirement plan contribution rates when you get salary increases.

In addition, you can allocate a certain amount of any bonus compensation towards retirement savings. The ING study found that a much higher percentage of women (47%) than men (31%) reported having less than $25,000 in their employer retirement plan and fewer women (67%) than men (76%) were receiving their employer\’s full matching contributions.

Tip #3: Get help.

Retirement planning is complicated and getting it wrong has major consequences that are hard to reverse down the road. Getting advice from a financial professional can help you create a plan to achieve your financial goals. To find the right person, collect referrals from friends, family or colleagues. Request background information on them and their firm and then narrow down the list. Make sure to find someone who you feel comfortable with, listens to your concerns and treats you with respect. You want to find someone who speaks and teaches in understandable language.

Stop the Ripple Effect

In our society, women are socialized to be the keeper of the household finances, often overseeing bill paying and the checking account, while men are socialized to be the breadwinner and investor, overseeing retirement accounts and major financial decisions.

In the current economic and social environment, these traditional roles do not serve women well. Women need to have a seat at the table and engage in the process fully. By seizing control of your financial situation, women can avoid the retirement ripple effect and retire with confidence. With knowledge and proper guidance, women can position themselves for an enjoyable, long and well-funded retirement.

Pamela has been helping women and their families improve their personal and financial wealth through good financial planning for the past 11 years. She is President of Jackson Sams Financial Services and her office is located in Herndon, VA. She is an investment advisor representative and offers securities and advisory services through ING Financial Partners, Inc. Jackson Sams Financial Services is not a subsidiary of, nor controlled by, ING Financial Partners. This information was prepared by ING and has been made available for ING Financial Partners\’ representatives for distribution to the public as educational information only.

¹ PBS Online, “To the Contrary, Hot Topics, Women and Philanthropy”

ING study findings are from an online survey conducted by ORC International during the period of Oct. 5-13, 2011. Respondents were 4,050 adults between the ages of 25 and 69 who are employed full-time with an annual household income of $40,000 or greater. Data was weighted to make the results representative of the U.S. population.

Pamela J. Sams, CRPC® MBA, BFA Financial Adviser

For over 20 years Pamela has been helping women improve their personal and financial wealth through solid financial life planning. Pamela’s education and training enable her to help clients successfully navigate through the myriad of financial decisions they face during their lives. She focuses on helping her clients meet their financial needs and help them work to achieve financial security and greater retirement readiness.

Pamela has become a strong voice in the area of personal finance for women. Her knowledge in this area has made her a sought-after speaker. She has been quoted in articles in various financial publications.

Throughout her financial services career, she has acquired several client service and financial planning awards. She has membership in the Million Dollar Roundtable (MDRT). Membership in MDRT is a highly recognized mark of excellence and limited to only the most successful in the financial services profession. This places Pamela among the top professionals in the global life insurance and financial services industry. Pamela was featured in the Women in Wealth section of Fortune Magazine November 2020 issue as a top Wealth Manager in the Washington DC metro area.

She successfully completed the demanding requirements to receive a Chartered Retirement Planning Counselor certification through the College of Financial Planning. Pamela also holds a Behavioral Financial Advisor designation, awarded to advisors who have undergone training to learn to help clients make financial decisions using a rational, values-based approach. Behavioral Financial Advisor’s integrate techniques founded in traditional finance, psychology and neuroscience to positively influence clients’ spending and saving behavior in the presence of challenging emotions.

Pamela is married, lives in Chantilly, VA and has three children. She devotes her free time to her family, her church, enjoys reading and loves to sing.

Securities offered through Securities America, Inc., a Registered Broker/Dealer, Member FINRA (SIPC). Advisory services offered through Securities America Advisors, Inc., a SEC Registered Investment Advisory Firm, Pamela Sams, Investment Advisor Representative.