Women’s planning & investment needs change over time. Here’s how to help meet their goals

October 12, 2022

women's planning and investment

We previously covered a few of the ways women often approach investing differently from their male counterparts. Now, we’re not making claims about “the female investor,” or suggesting innate differences between men and women that cause these divergences —rather, many women’s life circumstances may engender greater risk aversion.

Lower overall earnings, more time spent out of the workforce to care for family members and longer life expectancies may all add up to amplify the sense of risk to women’s retirement savings. That can lead to much more conservative investing and, potentially, missed opportunities.

Plan sponsors and advisors occupy key roles where they can help ensure that all plan participants, and women in particular, have access to the educational resources and guidance they need to invest more confidently and improve their retirement security.

One way to consider these needs is to take a closer look at how the stages of many women’s lives impact their investment choices and the individualized financial planning advice that may best serve them.

Stage 1: Early adulthood is a time to establish smart habits

Along with life milestones such as graduation, partnership or marriage and starting a family, many women also enter the workforce as young adults. In 2020, women made up 47% of the U.S. labor force over 16 years of age—a proportion that’s expected to increase in years to come.1 And yet, only about half (49.8%) of U.S. women have personal retirement savings.2 Often, expenses like homes, cars, childcare and the everyday expenses of life compete with the notion of setting a little aside for retirement—which, to be fair, may seem far off.

Plan sponsors and advisors can do more to raise this percentage, perhaps by helping all employees understand the benefit of compounding interest and the importance of starting to save early in life. Financial education resources that offer planning tools can be helpful; consider demonstrating a compound interest calculator like this free tool at Investor.gov.

Tools like this can help young adults see the impact of long-term investing, even if their contributions seem small. To workforce newcomers, this can help overcome mistaken assumptions about needing to make a lot of money before being able to start saving for retirement.

Stage 2: Career advancement & conflicting demands

Often referred to as “the messy middle,” this phase of life is often busy, hectic and demanding as families grow, careers advance and parents age. Alongside rising incomes, expenses can skyrocket as families upgrade homes and face the need to fund their children’s educations—sometimes while continuing to make payments on their own student loans. Some women may make a temporary exit from work to care for children or parents; other women make a more permanent departure.

There’s plenty of competition for the money that would be invested in retirement savings during these years, but some women may also experience an economic windfall such as an inheritance. Both of these situations call for discipline, and an advisor can help encourage a balanced approach between enjoying increasing wealth and planning for the future.

This intense phase of life can also cause upheaval for many women. Divorce or the death of a spouse or parent can create financial hardship—or a windfall. In either case, a plan advisor should help encourage discipline to stay the course with retirement savings and avoid hardship withdrawals that can set women back fast. These life circumstances may also create opportunities for advisors and plan sponsors to remind participants to start saving in advance for long-term care needs that may arise.

Stage 3: Major life transitions and intensified planning

As women return to the workforce after children leave home and/or continue to rise through the ranks, it can often seem like change is the only constant. Career advancements, grandchildren, retirement, chronic illness and even the death of a partner can all arise, often in close succession. These situations all call for compassionate attention and an advisor who helps ensure participants’ investments are on track and properly balanced as they move from accumulation toward retirement.

Considerations like estate planning and wealth preservation become more important in this phase as well. Plan sponsors can promote employees’ use of financial education tools that help them predict living expenses in retirement, envision income streams and learn about estate planning and other important steps to shore up a more secure financial future.

Stage 4: Retirement should be a time to celebrate

For many women, retirement represents the opportunity to finally focus on their own desires and needs — a time to live life to its fullest. Dreams of travel, volunteering or pursuit of long-deferred creative projects can finally come true when financial security is achieved.

As plan participants approach retirement, it’s smart to point them toward educational resources that can help them avoid fraudsters and scam artists. Advisors may also offer to discuss Social Security benefits claiming strategies, required minimum distributions and other important aspects of setting up a retirement income stream.

Recognize the need & rise to the challenge

Employer-sponsored retirement plans create unique opportunities to promote and grow women’s financial security. When plan sponsors and advisors work together to create more on-ramps to saving for retirement, to improve women’s awareness of investment opportunities and to encourage incremental increases in contributions over time, they can more effectively raise the tide of prosperity and financial security for all plan participants.

1U.S. Bureau of Labor Statistics, Civilian Labor Force by Sex, Labor Force Statistics from the Current Population Survey, Accessed September 2, 2022.
2United States Census Bureau, Those Who Married Once More Likely Than Others to Have Retirement Savings, January 13, 2022.