Much has been written as to whether women should retire at the same age as men or earlier. Currently, both American social security and Israeli bituach leumi begin at an earlier age for women than for men. But regardless of how old a woman is when she retires, often women have a more difficult time financing retirement than men do.
Here’s why:
Women work for fewer years than men
Many women don’t earn as much as men. Women tend to work both fewer hours per year and have a smaller total number of years in the workforce because they take time off to care for children and other family members. This means their salaries are smaller, and they have fewer years where they are paying into a pension plan. When they do retire and receive a pension, the monthly sum is often lower than a man’s pension.
Many women are less involved in finances than men
Despite changes in traditional roles, many men still make the financial decisions at home. I meet many women after their spouses pass away who don’t have an understanding of the larger financial picture. Knowing how to pay bills and balance the checkbook is an important part of family finances. But it is also important to understand the long-term investments and stay on top of tax reporting requirements.
Women live longer
Statistically, women tend to live longer than men. This means many more years of paying bills, with additional healthcare related expenses. A longer lifespan, with its ensuing bills, and smaller pension payments make it more difficult for women to plan for a financially secure retirement.
The solution: take control of your money
It’s vital for women of all ages and marital status to be financially savvy. Learn about your savings plans and pensions, and make sure you feel confident in your own ability to make serious financial choices.
Proper planning can make retirement fiscally comfortable for men and women. The earlier you begin preparing for retirement, better… regardless of your gender. For more about retirement planning, download our free e-book The Retirement Planning Book here.
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published May 25, 2015. Updated December 2018.