Rethinking Retirement for Women

The trend toward self-care has become more visible in recent years. And while many associate it with health and wellness, financial planning is also a form of self-care. It’s a priceless comfort to know that you have money in place to cover emergencies, your health needs, and your lifestyle.

Women have unique challenges with retirement planning

We’ve all seen the stats around women and money and the unique challenges women experience in managing and building wealth. Factors from the gender-pay gap to life events that may take women out of the workplace — like caring for children or aging parents — show up in women’s financial security, especially in later years. And while it’s common to see media portrayals of retirement showing two people not one, many women may start their retirement as a couple and then spend time in retirement solo. In fact, women are likely to be the primary financial decision maker at some point of their lives, and for some this role starts when their spouse passes away or after they divorce.

This context is important for all women to consider when planning for retirement. Women tend to live longer than men (age 79.3 vs. age 73.5, on average)¹, get paid less (84 cents for every dollar)² and, as a result, are often unable to save enough for retirement. The Social Security life expectancy calendar estimates that a woman who retires at 67 has an additional life expectancy of 20.7 years, but the average 401(k) savings for women is only $59,000. With the rise of incapacity from causes like Alzheimer’s disease, dementia, or disability, another 10% of women may find themselves “alone while partnered.”³

Sound financial, investment, and estate planning can help women account for these differences and create a comfortable lifestyle throughout their retirement years, but many times retirement planning for women overlooks those facts.

Retirement planning for married women

In most marriages, there’s a division of labor to maximize efficiency. For example, one spouse might manage day-to-day finances while the other handles the investments and wealth-building aspects. It’s important to stay involved in your household finances and get the complete picture of your wealth. We’ve seen instances of women clients who haven’t been involved in finances suddenly face a steep learning curve when a crisis hits, leaving her as the sole decision maker.

If you and your spouse work with a wealth advisor, attend those meetings to help ensure that you obtain financial literacy and understand how your financial plan works. Think of these scheduled conversations with your advisor and spouse as critical times to discuss money and delegation of responsibilities. When thinking about retirement, it’s important to factor in your wants and make sure your voice is heard, because what you envision for your retirement may be different from your spouse’s vision. Not all decisions have to be jointly made, but it’s critical that women stay involved in conversations about retirement because women in opposite-sex marriages will often outlive their husbands. And because it’s highly likely that one spouse outlives the other in any type of marriage, retirement planning together gives both spouses an opportunity to consider all possible scenarios.

Deciding together while thinking ahead

For example, Joe and Harriet, a retired married couple who reside in South Carolina, also have a condo in Sun Valley, Idaho, that they’ve owned for more than 20 years. Sun Valley is Joe’s “happy place” — a mountain town where he can hike and fish in the summer and ski in the winter. When he retired, he wanted to sell the condo in Sun Valley and buy a much larger, single-family second home at about twice the value of the condo and which comes with more maintenance costs and upkeep.

Harriet likes being in Idaho, but what she loves most is that her husband is so happy when they’re there. She’s nervous about having the larger amount of money tied up in a second home and the increased carrying costs. She shares that it’s very unlikely she would keep using the house as much when Joe passes away. If she were alone, she wouldn’t feel comfortable living in a smaller town with more limited health care resources. She would also want to remain closer to her children in South Carolina, instead of a four-hour flight away.

Going through the planning process, Joe and Harriet discussed and resolved several decisions:

• The couple could easily afford the second house due to careful and thoughtful planning. Harriet was able to see how the new house would impact their plan and that their cash flow would be more than fine, even with the increased costs of owning a larger home.
• Through discussion with their children, the couple considered the options if Harriet was left alone, such as selling the second house or having the children take over the financial responsibilities. They also talked about the fact that Harriet felt uncomfortable living alone in Sun Valley. By talking through and understanding the married vs. single implications for Harriet, she felt more comfortable with the decision to buy the larger, second home in Idaho. They are now extremely glad they bought the house and are enjoying spending time there together.

Thriving in retirement as a financially independent woman

Traditionally, many financial advisors have treated married couples as the default, often neglecting to adjust long-term planning for the unique challenges single women can sometimes face in retirement. Being an independent woman, whether by choice or life event, has both perks and disadvantages. With the autonomy of being single, you get to decide what to do with your life. Want to take a trip or make a major purchase? The only decision needed is yours.

But single women face specific challenges when it comes to retirement. You may think that expenses would go down during retirement since one person spends less than two. But if you’re single, it’s important to factor in the possibility that your expenses may increase. You may have plans to travel but find that you are charged a single supplement for your own room, or you may wish to pay for a companion to travel with you. You may also want to purchase a dream retirement home but need to factor in funding for additional repairs or maintenance that you need to pay someone to do. You may also need to consider additional funding for health care aides or long-term care after an illness or disability. Working with an advisor, you can be intentional in planning for these scenarios during your retirement.

Rethinking your retirement when plans change

Let’s look at the following example. Susan was divorced after a long marriage, with three grown children who had moved away. She decided she wanted to move to an area that she had always enjoyed visiting on vacation, where she could enjoy the slower lifestyle pace and local activities.

She sold the family home and used the proceeds to buy one in the resort area. But after living there for a few years, she realized that she didn’t have the same feelings that she had initially. Her grown children came to visit, but it was a bit inconvenient for them to travel to the resort area, and they were busy with their own jobs and families. Susan realized her priority was to be closer to her kids and grandkids.

Susan moved to the area where her kids live, even though she probably would not have considered living in the new area before. She is much happier because she’s near her family, but this decision did come with some financial consequences. The expenses of moving multiple times and taking a loss on the sale of the resort area house did require some adjustments to her financial plan. She also increased her travel budget so that she could pay for friends to go with her on trips since most of her friends couldn’t afford the kinds of travel she wanted to do.

Financial planning as self-care

One of the best ways you can feel prepared and empowered to make wise financial decisions is to create a written financial plan. A financial plan brings together your life story, your ambitions, your dreams, and your assets into one comprehensive view. A well-crafted financial plan covers the numerous possible scenarios that you may face and has the flexibility built in to deal with the unknowns. Learn more about how we help our clients put a plan together: Connecting the Dots on Your Financial Plan.

It’s better to have a plan in place when you’re faced with a crisis (like a spouse’s death, divorce, or illness) than having to create a plan to manage a crisis. During periods of uncertainty and upheaval, it’s often our emotions that lead us. Having a plan allows you to expect the unexpected — it can help give you the space to breathe and process these changes from a place of preparation and action. You’ve seen the signs that say, “In case of emergency, break glass.” Your financial plan functions in the same way and helps give you the assurance that you can face whatever life throws at you. Whether you’re married or single, your advisor can help you put a plan together that encompasses all phases of your retirement.

If you are not a Mercer Advisors client and want to know more about retirement planning for women, let’s talk.

¹ “United States Life Tables, 2021,” Center for Disease Control and Prevention, Nov. 7, 2023. 

²  “How Women Can Increase Odds of Saving Enough for Retirement,” Kiplinger, May 8, 2024.

³ “Dementia & Alzheimer’s Disease Statistics and Facts,” The Center for Advancing Health, Jan. 11, 2024.