The Financial Challenges of Women

As financial planners our goal is to guide individuals and families through each transition step of life. The basic concept is to build goals, save and think long-term. However, each individual has a different path and different obstacles to face. When it pertains to women there are many challenges which make their financial plan unique.

Juggling both family and work can become challenging. Women will likely take career breaks because of family, taking care of kids, maternity leave and dealing with divorce or becoming a widow. Women tend to spend more time managing the household budget, caring for kids and relatives resulting in more time out of the work force.

The majority of family caregivers remain women, and they provide more hours of care than their male counterparts. An estimated 59% of women provide 20 hours or less of unpaid care per week compared to 41% of men.²

As a result, their savings are impacted by all of these factors, which makes it so important to take control of your finances early on.

In addition to all this, divorce has a lasting, negative impact on finances that, in heterosexual divorces, affects women the most. After a divorce is finalized, men hold 2.5 times the amount of wealth women do, and women’s household income falls 41% (compared to men’s 23%). ³ 

Therefore, these women will have less time till retirement with less opportunities to increase their retirement savings versus those who divorce earlier. This can also have a significant emotional toll on women and it’s important to create a financial plan for the future. The next big factor is that in the US, the average female lives 5 years longer than a male. With longer life expectancies than men, women tend to live more years in retirement and have a greater chance of depleting other sources of income. The longer life expectancy also has negative impacts on the amounts of their pensions and social security.

 In 2021, the average annual Social Security income received by women 65 years and older was $14,204, compared to $18,108 for men, while women represent more than half of all social security beneficiaries age 62 and older. In 2022 women generally receive lower pension benefits due to lower earnings and a high share of part-time workers are women (64%).^1. The longevity also contributes to women having a greater chance of needing assisted living or nursing home care.

So, given these unique challenges what should women do? To start, women should start investing early into their retirement accounts and work with a financial advisor. Working with an advisor can give you guidance to help you keep on track and achieve your financial goals and continue to build wealth. They can also help you navigate the times when things don’t go as planned. Medical issues, Divorce or the death of a spouse can have significant impacts on your finances as well as your emotional wellbeing. It is very reassuring to have someone by your side who knows your situation when these challenges arise.

1. Social Security Fact Sheet, 2023
2. The State of Women and Caregiving, 2021
3. Fortune, It’s hell: how divorce laws are designed to create unnecessary financial hardship for women, 2023