In the 1990s, I was the only female partner in a four-partner financial planning firm.  On Friday afternoons in the summer, I would watch my male colleagues leave the office early for “important business” on the golf course. It wasn’t long before I decided I needed to be doing this business too, and decided to take up golf.  On my first round out, I tried to act confident as I teed up my ball in exactly the same place as one of my partners had just done. 

He came running up to me, waving his hands just as I prepared to swing.  “Stop!” he said.  “You need to shoot from there,” as he pointed a good 20 yards ahead of where we stood.  It was thus I learned about “ladies’ tees” –  a convenient advantage given to women golfers who presumably do not have the same upper body strength as their male counterparts. 

If only the game of life was like the game of golf!  But alas, such is not the case, particularly when we consider life’s later years.  The experience of women and men can be vastly different in the retirement years, and in this case, the advantage definitely goes to men.  Men are typically well ahead of women in terms of their financial security and the resources they bring into their retirement. 

The reasons for the male advantage are generally well known.  First and foremost, they have shorter life expectancies – by approximately five years – meaning their retirement nest egg doesn’t have to be a big as a woman’s.  Their lesser need notwithstanding, men nevertheless accumulate more than women, as a result of higher pay and longer time spent in the workforce.  Because women often remain the primary caretakers of children and the elderly, they work about seven fewer years compared to men.  This translates into significant shortfalls in retirement plan savings and Social Security credits. 

There is, however, another major factor that operates differently for the genders in their retirement years, and has received far less attention.  From the age of 65 to the end of life, the majority of American women are single, whereas the majority of men are married.  As the old adage goes, “two can live more cheaply than one,” and such is certainly true in retirement.  There is no cost sharing of basic living expenses for older single women, and often they pay for household tasks a domestic partner would otherwise provide.  And while it is tempting to argue that many of those single 65+ women were once married and therefore have the wealth of a deceased spouse to ease the transition, the statistics suggest otherwise.  After losing a partner through death or divorce, a woman’s standard of living generally declines. 

So given the reality that women must drive harder, hit the ball longer, to reach the green of a secure retirement, what actions should every woman be taking? 

  1. Put herself first – even ahead of children and elderly parents. This does not mean neglecting those she loves.  Far from it.  It means taking care of herself so she is not depleted financially or emotionally.  It means funding a retirement plan before funding a college savings plan.  It means tapping parents’ own assets for their care, and knowing that Medicaid is available as a safety net if those assets run out.  It means hiring the help needed, or even having her parents pay her for caretaking services.
  2. Build her own retirement assets.  When a woman is not working, she should still try to set aside funds for her future.  This can be done through spousal IRAs, or even in after-tax savings accounts.  
  3. Invest in herself.  The key here is to remain marketable and employable even when there are times she cannot work or chooses not to.  Getting back to work is the best way to build retirement wealth, through participation in a retirement plan and building up more Social Security credits. Investing in herself also means getting the disability and long-term care insurance coverage women need but often neglect.
  4. Get smart about Social Security.  All women need to be aware that benefits are calculated on the highest 35 years of earnings.  If there are fewer than 35 years, then zeroes go into the calculation, bringing down the benefit.  And women need to know they are eligible for a spousal benefit as long as they have been married to their spouse for at least 10 years.  Those two numbers – 35 and 10 – should be top of mind before making decisions to leave the workplace or a marriage.
  5. Take more investment risk.  Back to the golf metaphor – every woman needs a powerful driver for her retirement game plan.  She needs the growth of equities more than the safety of fixed income, particularly in the early years of investing.

Finally, women need to ask for help.  Singleness in retirement does not require stoic self-sufficiency, nor does it mean going it alone.  Finding a CFP® professional to be a trusted partner in budgeting, risk management, and investing decisions allows women to overcome the disadvantages they may face in retirement, and helps them achieve the financial security they so richly deserve.