How Retirement Planning Should Address Women’s Risks

AARP Public Policy Institute research finds women receive roughly $4,800 less per year in Social Security benefits and hold between 33% and 50% less in retirement savings than men. Nearly six in 10 retired women identify Social Security as their main source of income, compared with 47% of retired men, and many women express concern about the program’s future availability.

The earnings gap starts during working years. Median weekly pay for full‑time female workers is about 16% lower than men’s, equivalent to roughly $10,000 a year. Lower lifetime earnings reduce retirement account balances and lower Social Security benefits tied to prior earnings.

Caregiving responsibilities further affect savings. Women make up about 61% of caregivers; daughters are nearly twice as likely as sons to provide hands‑on care and represent about 65% of adult children who step in. Data from a family care platform shows nearly 79% of care hours are unpaid family labor, which can force some women to reduce hours or leave the workforce and deplete retirement balances. Lily Vittayarukskul, CEO of the family health‑and‑wealth platform Waterlily, noted, ‘Anyone that takes on a caregiver role knows not only is it mentally taxing, but it is physically taxing. It comes at the cost of people having to leave the workforce in order to provide enough care.’

Advisors outline several practical measures. Abigail Gunderson, senior wealth advisor at Tanglewood Total Wealth Management, recommends starting to save early, setting up and maximizing employer plans such as 401(k)s, and using taxable brokerage accounts when retirement plans are not available. Gunderson recommends saving at least 10% of earnings into a brokerage account if a 401(k) is not an option and using spousal IRAs to keep contributions growing when planning time out for caregiving. ‘You can also invest in a brokerage account in your name and dollar cost average,’ she recommends.

Financial plans for women often require different scenario testing. Polly Hamm, a wealth advisor at Mission Wealth, recommends stress‑testing plans for longer lifespans and higher health and long‑term care costs and evaluating a client’s support network and decision‑making backup. Hamm explained, ‘We stress‑test their financial plan to say what if they do live longer? What if there’s additional health costs or even long‑term care costs?’

Health and longevity differences widen exposure to cost risk. Women live on average about five years longer than men and face higher rates of certain conditions; they are roughly twice as likely to develop Alzheimer’s disease. Women make up about 71% of assisted living residents and are widowed at higher rates than men, increasing the likelihood of needing paid care and for a longer period. Jennifer Baick, vice president of financial planning at Mercer Advisors, noted that traditional planning assumptions-such as a 20‑year retirement and spending 80% of pre‑retirement income-can understate the costs many women will face.

Advisors recommend planning steps that include early long‑term care planning, building diversified savings outside employer plans, maximizing available retirement contributions, documenting decision‑making support and care plans, stress‑testing for longer retirements and higher medical costs, and using spousal accounts when work gaps occur. Surveys of women savers show widespread concern about retirement income and the long‑term availability of Social Security, reinforcing the focus advisors place on these measures.