Women face unique retirement planning and investment challenges, including longer lifespans and potential income gaps from career breaks or lower lifetime earnings. Although everyone can benefit from strong investment strategies, women have a particular interest in pursuing an investment approach that is tailored to these challenges.
Single women Single women, widows, and married couples with income disparities may benefit from adjusting their investment strategies to improve financial sustainability in retirement.
Longevity and Portfolio Sustainability
Since women typically live longer than men, their retirement savings must stretch further. Disparities in lifetime earnings and Social Security benefits, which are typically higher for men, can leave widows in a difficult financial situation during retirement.
A well-structured portfolio with sustainable income sources—such as dividend-paying stocks, annuities, and growth-focused investments tailored to the investor’s risk tolerance—can help women maintain financial security in retirement.
Living longer usually results in increased exposure to inflation, which is why women may also want to consider inflation-protected investments. Inflation-adjusted incoming streams or investments, such as Treasury Inflation-Protected Securities (TIPS) or certain real estate investments, can help women maintain purchasing power over time.
Managing Market Volatility
Since many women may find themselves managing finances alone later in life, it’s important to have an investment approach that accounts for market fluctuations.
Bond ladders, balanced portfolios, and investment vehicles with downside protection—such as indexed annuities or low-volatility funds—can provide stability while still allowing for growth. Diversifying across asset classes and maintaining a long-term perspective can help reduce the impact of short-term market downturns.
Maintaining a liquid emergency fund can help women manage unexpected expenses. Having an accessible fund reduces the likelihood that women will need to liquidate investments during a market dip if an emergency arises.
Bridging the Income Gap
Women who took career breaks for caregiving or earned less than their spouses may have lower Social Security benefits and smaller retirement savings.
Maximizing contributions to retirement accounts, taking advantage of employer match programs, and utilizing spousal IRAs can help close the gap. Catch-up contributions for those 50 and older also offer an opportunity to bolster retirement savings.
Thoughtful Social Security Planning
Couples should carefully consider Social Security claiming strategies to maximize lifetime benefits and ensure financial stability for the surviving spouse. Strategic planning can help mitigate the risk of a widow facing a significant reduction in household income after her husband’s death.
Some couples choose to have the higher-earning spouse delay claiming benefits until age 70 to maximize the survivor benefit. This can provide a higher guaranteed income for life, which is especially important given women often have lower lifetime incomes and longer average lifespans.
Since the survivor benefit is permanent once claimed, early decisions can have lasting financial consequences.
Adjusting to a Single Social Security Benefit
If a couple has been relying heavily on both benefits to cover retirement expenses, the reduction to a single benefit can create unexpected financial strain. To prepare, some couples choose to diversify their income sources, such as maintaining personal retirement savings, investing in annuities, or structuring assets to provide stable cash flow beyond Social Security.
Additionally, couples should be aware of how earnings affect benefits if one or both spouses plan to continue working in retirement. If benefits are claimed before full retirement age, earned income above a certain threshold can temporarily reduce payments.
A retirement planner can help couples navigate these rules, optimize benefits, and safeguard the surviving spouse’s financial security.
Estate and Legacy Planning Considerations for Women
Widows and single women need to ensure their investment portfolios align with their long-term goals and risk tolerance. Estate planning strategies—such as trusts, beneficiary designations, and tax-efficient withdrawal plans—can help preserve wealth and minimize taxes.
Structuring investments to reduce required minimum distributions (RMDs) and optimize inheritance for heirs is also crucial. Women should review and update estate planning documents regularly to reflect life changes, ensuring assets are distributed according to their wishes.
Working with an estate planning attorney or financial advisor can help simplify these decisions and create a solid plan for wealth transfer.
Managing Inherited Wealth After Widowhood
Women who inherit assets, such as life insurance proceeds or retirement accounts, often benefit from working with a financial advisor to develop a plan that balances security and growth.
Avoiding common pitfalls—like withdrawing too much too soon or being overly conservative—can help ensure assets last throughout retirement.
It’s important to assess inherited investments to ensure they align with long-term goals and risk tolerance. Additionally, understanding the tax implications of inherited retirement accounts, such as required distributions from traditional IRAs, can help avoid unnecessary tax burdens.
Tailoring Investment and Retirement Plans to the Unique Needs of Each Individual or Family
Everyone, regardless of their gender, can increase their chance of financial stability in retirement with a well-crafted retirement plan that’s designed to withstand unforeseen circumstances. Individuals and couples seeking investment and portfolio management guidance can schedule a meeting with Fullerton Financial Planning by calling (623) 974-0300.
You can also join us for an upcoming webinar, seminar, or event in Peoria, Scottsdale, or Phoenix.
