Mar 14, 2024 By Gary Boatman 4 min read

In 1977, the United Nations declared March as International Women’s month. They did this to recognize the challenges and accomplishments that women have in the world. Today, we will discuss some of the financial challenges that women face in the United States.

Two surveys of women ages 25 and older, commissioned by the National Council on Aging, found “that half of American women are struggling financially today, making it very difficult for a secure retirement.” There are a number of factors that contribute to this uncertainty.

While the gap has narrowed, there is still a gender pay gap between women and men. The old stereotype is no longer true that men are the family providers and need more income. Many women earn more than men in their lives, and there are currently more women attending college than men. Sometimes certain professions have higher income levels, and women often spend less time in the workforce if they are taking care of children or elderly parents. Less time in the workforce and lower pay can lead to lower Social Security benefits during retirement.

Women typically have a longer life expectancy than men of the same age. While this can be good, it can lead to more financial issues. Longer life can lead to higher lifetime health care costs. If you visit a nursing home, you will observe that 85% or so of residents are women. This is because often women marry a man a few years older than themselves. A wife’s longer life expectancy means her husband is not available to help provide the care she needs, and that she may have provided for her husband. The U.S. census reports that the average American woman becomes a widow at 59. This means that financial planning is essential and should start at a young age.

Now that we know some of the challenges, let’s discuss some steps to be better financially prepared. Fidelity Investments released the “Women Tapping into Their Financial Superpowers” report which states that one in four women now have a financial plan. That is a good start, but the other 75% need to start preparing. Hopefully everyone creates a written financial plan. Creating such a plan will require considering all of the variables that could affect your financial life. Of course, it is important for everyone to continue to increase their financial literacy, so that you can make better financial decisions.

Social Security is one of the most important retirement assets. It is guaranteed to provide lifetime income and also receives cost of living increases to help with inflation concerns. Because of women’s longer life expectancy, it is extremely important to maximize your benefit when electing starting dates. Decisions are usually made while in your 60s that can last for decades. The partner with the largest SS payment should delay starting as long as possible because it can affect how much each person receives and will be very important to the survivor. Women should play a large role when deciding when a spouse should start receiving SS benefits.

Since one Social Security check will end at the first death in a couple and often pension income if available will go down, it is probably important to have some sources of other lifetime income available for later in life. Women need to be more concerned about the possibility of needing long-term care. There are some options available today to replace the old style, use-it-or-lose-it insurance policies. Another thing that goes up upon the death of the first spouse is income taxes. You only get half of the personal exemption and the tax brackets are almost half as narrow. This means your tax rate soars. Also, if you have large balances in qualified savings such as 401k and IRA, required minimum distributions could drastically increase your Medicare Part B premiums. This is why proactive tax planning is necessary. Careful planning can help to mitigate these issues and the sooner you start the better. Why not today?