Retirement should be an idyllic time away from the everyday grind. But for women, this dream can be obscured by surprises—especially when it comes to the intricate dance of timing and the often-underestimated spike in expenses. While everyone needs to plan their financial future, retirement planning for women requires a more thorough understanding of timing and costs.
By highlighting the timing and expense surprises that can derail even the smartest plans, the Laurel Wealth Planning team aims to empower women to take charge of their financial futures and embrace a retirement that truly represents their ambitions.
The Timing Tangle
Retirement timing involves more than just deciding when to leave the workforce.
It’s a complex choice for women, influenced by factors including family relationships, professional paths, and longevity. Because of women’s longer lifespan, their retirement savings must last longer—which means it’s important to carefully examine when to start saving, when to access these funds, and when to claim Social Security benefits.
Often the biggest timing surprise for women is the revelation that they didn’t start saving early enough. Many underestimate the significance of starting to save in their 20s and 30s and the power of compound interest. Career interruptions, often for childcare or elder care, can further delay savings and impact retirement readiness.
Additionally, timing Social Security benefits is crucial. Claiming at 62 provides earlier access but reduces monthly payouts for life, while waiting until 70 maximizes benefits. The right choice depends on factors like health, longevity, and spousal benefits, making careful planning essential.
The Cost Conundrum
Many women are unprepared for the fact that retirement expenses frequently exceed their initial expectations. Because they live longer, they are more likely to need long-term care services, which can be quite costly.
Inflation further compounds the cost problem. The rising cost of living can seriously undermine the purchasing power of savings, making it critical to consider inflation when planning for retirement. Advisor Mallory Kretman shares, “To be conservative in our planning, we assume inflation will exceed the Federal Reserve’s target rate in our financial modeling software. Additionally, we assume an even higher inflation rate for medical costs—double the baseline rate—as healthcare expenses continue to rise sharply for many Americans.”
In addition to obvious expenses, unexpected costs like unanticipated medical bills, house repairs, or family assistance, can occur. These unexpected costs can quickly reduce retirement savings and require careful budgeting and emergency fund planning. “In partnership with your financial advisor, it’s a very good idea to do a brain dump of these possible future expenses,” Mallory explains, “for example, consider budgeting a certain amount for large home repairs every 5 +/- years throughout your lifetime. If you don’t yet have grandchildren, envision whether you might have a desire to gift to any future grandchildren during your lifetime. In many cases, it makes for a stronger financial plan to overestimate possible spending during your lifetime than to underestimate.”
Career Interruptions and the Cost of Lost Time
For many women, career breaks—often for caregiving—can significantly impact retirement savings. Time away from work may limit salary growth, reduce retirement contributions, and delay financial milestones. Beyond lost income, career interruptions also mean missing out on employer-matched retirement contributions and opportunities for professional advancement, further widening the long-term savings gap.
Planning ahead for these potential disruptions—whether through spousal contributions, catch-up retirement savings, or strategic career decisions—can help minimize their impact and keep long-term financial goals on track.
The Pay Gap and Investment Gap: Amplifying the Challenges
Last but not least, the ongoing gender pay disparity and women’s propensity for more conservative investing make retirement planning for women even more difficult. Conservative investment methods can limit growth prospects, and lower lifetime earnings typically translate into reduced retirement funds.
But there’s hope. By negotiating salaries, looking for opportunities for career promotion, and diversifying their investment portfolios, women can address these gaps. Financial literacy and professional guidance play a critical role here in strengthening women’s ability to make informed financial decisions.
Strategies for Navigating the Surprises
Now let’s take a more cohesive look at strategies for navigating the timing and cost surprises women often face in retirement.
- Early planning: Start saving for retirement as early as possible to optimize the power of compound interest.
- Realistic budgeting: Create a thorough budget for current and future expenses, including healthcare and possible long-term care needs.
- Inflation adaptation: Factor in inflation when anticipating retirement costs and consider investments that have potential to outpace inflation.
- Social Security: Carefully assess Social Security claim timing options to optimize benefits.
- Career disruptions: Develop planning strategies to lessen the impact of career interruptions on retirement funds.
- Portfolio diversification: Invest in different asset classes to manage risk and maximize returns.
- Financial literacy: Stay informed about current financial subjects and pursue professional guidance.
- Emergency planning: Build an emergency fund to cover unanticipated expenses.
- Routine review: Routinely review and modify retirement plans to align with life events and economic conditions.
Reach Out for Help
With professional financial guidance, it is possible for women to overcome timing and cost surprises in retirement.
At Laurel Wealth Planning, retirement planning for women is all about helping you look toward your future with confidence and excitement.
To schedule a complimentary meeting, email mallory.kretman@laurelwealthplanning.com or call (952) 854-6250. Find out if the Laurel Wealth Planning team is the right financial advisor for you based on your wants and needs.
About Mallory
Mallory Kretman is Wealth Manager and Shareholder at Laurel Wealth Planning, a full-service, fee-only firm based in Minneapolis, Minnesota. In her role, Mallory leads LWP’s financial strategies and keeps the firm updated on tax changes and financial, tax, and estate planning strategies, sharing her insights and operationalizing strong advice for clients. She is skilled in understanding clients’ needs and providing compassionate, clear financial advice, particularly for those in life transitions or new to financial planning. She says, “I was drawn to Laurel Wealth Planning because of our emphasis on the importance of each client. I love being part of an environment that truly values the relationships we are building and a commitment to results.”
Mallory graduated with high honors from the University of Wisconsin-La Crosse, where she studied liberal arts and was a member of three honor societies. Joining Laurel Wealth Planning in 2011, her dedication and initiative led her to become a shareholder in 2019. She also obtained the CERTIFIED FINANCIAL PLANNER® certification and holds full licenses. Mallory’s wisdom comes from more than formal study and professional experience. Raised by a single father and having cared for her family during challenging times, she gained strength, perspective, and compassion. She and her husband, Hank, have two children, Henry and Ellie. A wine enthusiast, she has toured vineyards in France’s Loire Valley and Champagne region. She also enjoys the “little things” in life, like a strong cup of coffee and spending quiet nights at home with her family and their yellow lab, Penny. To learn more about Mallory, connect with her on LinkedIn.
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