Here's how women can achieve their best financial futures

JUNE 23, 2023


Never underestimate the financial power of the American woman. 

Women in the U.S. control $10 trillion – yes, trillion – in assets. And that number is expected to soar to $30 trillion by the end of the decade, as women increasingly take responsibility for financial decisions at home and on the job.1 One corollary: Women have more riding on the financial decisions they make than ever before. Here are key steps that women can take to make the most of their financial decisions, particularly the retirement planning decisions, that lie ahead of them:

 

1. Understand the landscape.

By “landscape,” we mean the financial, economic, and demographic trends that affect women differently than men – trends that create distinct challenges for women as they chart their course to a financially predictable retirement. First, men who turn 65 this year have an average life expectancy of 66.6 years; for women, average life expectancy is 72.9.2 Because women live longer than men, they’re left with more retirement years to fund.

And that’s not the only challenge. The wage gap between men and women persists – currently, women still earn 17% less than men, on average.3 Earning less makes it tougher to save for retirement. Employer contributions to retirement plans, based on earnings, are likely to be less, too. Other factors make it tougher for women to save for retirement: they’re more likely to have taken time off from work to raise a family, more likely to work in part-time jobs, and more likely to have been in jobs, such as the service sector, that saw big layoffs during the pandemic.

 

2. Dream big.

Of course, you need enough retirement income to pay the bills – but should your retirement just be about paying bills? The best way to make your dreams come true is to plan to make them true. What could you do if you weren’t tied to your current job for the benefits? What could you do if you didn’t have to work several jobs… if you had more income than Social Security provides… if you were confident about your financial future… if you could do whatever you wanted?

Think big. Would you want an encore career in some field that’s always interested you? Would you travel around the country or the world… live near your kids and grandkids… mentor young people… take up new hobbies or learn new skills? You may not get it all, but dreaming big can help you identify the goals that will make your retirement rewarding – and help you work toward the funding to pursue them.

 

3. Get ready for the future you want.

To turn your retirement dreams into retirement reality, you need to start with a strategy. Sounds straightforward, but only 15% of women have a written retirement strategy and only 42% of women have any retirement strategy. You should be among those with a plan.4

Maximizing your earnings now is a good place to start. For example, it may be time to ask for a raise or a bigger retirement plan match from your employer. Also, make the most of the retirement tools you already use, such as making the maximum contributions to your 401 (k) or IRA. Automatic contributions – from your paycheck or bank account – are advantageous, because you don’t need to remember to make them. Workers aged 50 and older can make extra, “catch up” contributions of $7,500 to most 401 (k)s or other defined contribution plans in 2023 without tax penalty.5

While you’re planning, remember to plan for any family obligations you have or anticipate having, such as taking care of aged parents or helping grown children who may return home. And don’t get distracted; it’s too easy to get lost in all the retirement information that’s available on the Internet. Concentrate on news, commentary, and research that is the most relevant to you and your situation. 

 

4. Work with a financial professional.

Which investments should you make? How should you diversify? Do you need long-term care? When can you retire? Coming up with the best answers for you takes expertise. Fortunately, there are many financial professionals ready to help. Find one who can create a customized strategy that aligns to your goals and risk tolerance, who can provide the guidance and knowledge you need to feel confident, informed, and in control of your future. Your financial professional should work with you over time to keep your strategy up to date, and partner with tax professionals, estate attorneys, and insurance specialists to complete your retirement picture.

 

Want to learn more? We can help. Click here to request our Investing in You infographic and seek out your financial planning professional for advice.

1. Ted Jenkins, Cnbc.com, "Women are gaining power when it comes to money – here’s why that’s a big deal," May 3, 2022.

2. Ssa.gov, "Period Life Expectancies Calendar Years 1940-2001," accessed Feb 7, 2023. 

3. Valentin Bolotnyy and Natalia Emanuel, Hbr.org,  "How Unpredictable Schedules Widen the Gender Pay Gap," July 1, 2022.

4.  Transamericainstitute.org, "21 Facts About Women’s Retirement Outlook… and 11 Steps to Improve It," March 2022.

5. Irs.gov, "Retirement Topics – Catch-Up Contributions," Oct. 26, 2022.

Jackson, its distributors, and their respective representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Tax laws are complicated and subject to change. Tax results may depend on each taxpayer’s individual set of facts and circumstances. You should rely on your own independent advisors as to any tax, accounting, or legal statements made herein.

Jackson® is the marketing name for Jackson Financial Inc., Jackson National Life Insurance Company® (Home Office: Lansing, Michigan),  and Jackson National Life Insurance Company of New York® (Home Office: Purchase, New York). Jackson National Life Distributors LLC, member FINRA.